1951-04-23

[Stage Direction]
First report of standing committee on standing orders-Mr. MacLean (Cape Breton North and Victoria).


Hon. Alphonse Fournier (Minister of Public Works):: Mr. Speaker, on Friday last the leader of the opposition (Mr. Drew) put the following question to me:
Has the minister explored the possibility of using the dams north of Ottawa to hold back a greater head of water to alleviate flood conditions?
The answer is that the officials of the Department of Public Works, aided by outside consultants, have given a great deal of thought to this problem. To date they have found no way of doing more to alleviate flood conditions. I have in hand a comprehensive report and study concerning this question, which I propose to read.
The question of controlling the flow of the Ottawa river has been studied by the Department of Public Works for many years, in consultation with the two provincial power commissions operating the river and with the other industries, including lumbering, who utilize the river for navigation. The study has not only been carried out by our engineers; we have added thereto engineers who are fully familiar with the situation. We retain on our staff a consulting engineer who knows the situation particularly well and whose guidance has been followed' for many years, as well as in the present situation. Any steps taken to guide and control the present floods were as directed by him.
On further going over the situation and analysing it thoroughly, it is agreed that no other course could have been followed that would have made flood conditions in the Ottawa area any less difficult. This opinion is shared by the officers of the power companies, of the two provincial power commissions and of the other services utilizing the river. In considering the question of the control of water at different dams, the first point always kept in mind is to alleviate flood conditions as far as possible, and the
80709-145J
second is the storage of water to be used later by the different parties. In detail there are on the river between Ottawa and the headwaters dams both for power and for storage, as follows:
Dozois: built and operated by the Quebec Hydro Electric Commission. This has a drainage area of 3,000 square miles. At the beginning of the present freshet season this reservoir was completely empty, but was closed by the Quebec authorities on March 31, and has remained closed ever since. The flow into this reservoir during the past two weeks has exceeded over 20,000 cubic feet per second.
2.	Rapid No. 7: operated by the Quebec government. This is a power and storage development. To date, with a limited outflow required for power purposes only and the main dam closed, it has not been completely refilled.
3.	Quinze reservoir:	controlled by the
Department of Public Works. Drainage basin 8,900 square miles. At the start of the present freshet this reservoir was entirely empty, and on April 16 it was partly closed and only sufficient water permitted through this dam-approximately 7,500 cubic feet for power purposes.
4.	Timiskaming reservoir: dam operated by the Department of Public Works. Drainage area, 17,000 square miles. At the start of the freshet this reservoir was entirely open. At the beginning of the freshet the run-off increased the water level with the discharge fully open and the lake rose seven feet. On April 17 in order to reduce the flood the dam was partially closed. This resulted in the reservoir rising over one-half a foot in one day, which would have filled the reservoir in a few days and resulted in a higher outflow than at present is being encountered. It was necessary to keep lake Timiskaming open, as by its own drainage area it went up one foot in one day, and with rises like this apparent it is certain that conditions on lake Timiskaming would be such that the sewage disposal and filtration plants of the towns of both Haileybury and New Liskeard, which always have to be watched, would have been flooded out.
From Timiskaming to Ottawa there are the following dams: 1. La Cave, under development; 2. Des Joachims, now fully developed; 3. Bryson, fully developed; 4.

Flood Conditions
Chenaux, fully developed; 5. Chats falls, fully developed; 6. Chaudiere, fully developed.
In the area covered by these six developments there is the run-off from approximately
17,000	square miles, which accumulates a discharge of approximately 145,000 cubic feet per second, none of which can be controlled at any of the dams, as there is absolutely no storage.
It is therefore evident that the whole situation so far as the vicinity of Ottawa is concerned was due to the inability to store any of the waters between Timiskaming and Ottawa, a distance of approximately 200 miles, and that therefore the major lakes, Timiskaming, Quinze and Dozois, had no effect on the flood that took place in the Ottawa river, but, on the contrary, assisted in retarding the flow.
All things considered, we know of no move that could have been made that would alleviate flood conditions in the area other than the ones that have been indicated and we are pleased to have had the cooperation of the Ontario and Quebec hydroelectric power commissions in order to give full effect to these measures.


Mr. George A. Drew (Leader of the Opposition):: Mr. Speaker, since I raised the
question may I express to the minister my appreciation of this review of what has taken place. From my own experience I know of the close co-operation there is between the provincial authorities and that section of his department which handles this subject. I would point out, however, that with the construction of the large new power dams on the river, new problems are presented. I would strongly urge that a general review of the whole situation be undertaken, with a view to considering the possibility of an increase in the storage facilities at some points, to hold not only the water in the upper areas but also the heavy flow that comes below these dams.
I am sure that the report correctly interprets the situation, because I know that the officials of the minister's department work in the closest co-operation with those who are primarily responsible for the operation of these dams.


Alphonse Fournier: Mr. Speaker, I
certainly will give instructions to my officials to make a survey and look into these conditions, because the results of the flood are terrible. I am personally acquainted with the conditions, because they happen to be close to me, and no one sympathizes more with the people in those areas than I do.



QUESTIONS

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)


Mr. Browne (St. John's West):: What have been the revenues and expenditures of the Canadian National railway system in Newfoundland for the fiscal years 1949-1950, and 19501951?


Mr. Benidickson:: The Canadian National Railways advise as follows:
The revenues and expenditures of the Canadian National railway system in Newfoundland are kept on a calendar year basis, and this information from the date of entrustment of operation, April 1, 1949, to December 31, 1949, and for the calendar year 1950, is as follows:
Revenues and expenditures of Canadian National Railways in Newfoundland, including rail, express, steamships, telegraphs, and hotel:
	Year 1949	Year 1950
Operating revenues .	$ 7,756,495	$11,015,287Operating expenses .	10,340,526	13,864,558Net operating	deficit 	2,584,031	2,849,271Other income-	dr	97,179	153,043Total deficit .	$ 2,681,210	$ 3,002,314
The above figures, it will be noted, cover operating revenues and expenses. They do not include charges for headquarters administrative expense.



DEFENCE PRODUCTION DEPARTMENT


Mr. MacLean (Cape Breton North and Victoria):: 1.	What are the names and home addresses of the key men or heads of branches of the Department of Defence Production?
2.	With what firms or business association were each of them associated immediately prior to appointment to present position with the said department?
3.	In each case (a) is business association to be continued; (b) what salary is paid by the department; (c) what is the term of employment?
4.	Are branches to be opened to serve the eastern and western sections of Canada?


Mr. Mcllraiih:: 1.	Deputy minister, M. W. Mackenzie, Ottawa, Ont.; special assistant to the deputy minister, T. N. Beaupre, Ottawa, Ont.; financial adviser, H. G. Hesler, Montreal, P.Q.;

associate financial adviser, L. D. Hudon, Sorel, P.Q.; general counsel, K. B. Palmer, K.C., Toronto, Ontario; director, legal branch, W. T. Patterson, K.C., Winnipeg, Man.; comptroller, G. F. Wevill, Ottawa, Ontario; director, economics and statistics branch, E. P. Weeks, Ottawa, Ont.; director, administration branch, J. C. Rutledge, Ottawa, Ontario.
Production Branch: Co-ordinator, Crawford Gordon Jr., Toronto, Ontario; director, aircraft division, F. S. McGill, Westmount, P.Q.; director, machine tool division, E. Barker, Toronto, Ontario; director, shipbuilding division, A. C. McDonald, Montreal, P. Q.; director, mechanical transport division, J. M. Cochrane, Windsor, Ont.; director, guns and ammunition division, H. R. Malley, Ottawa, Ontario; director, electronics division, A. H. Zimmerman, Niagara Falls, New York; director, small industries divisions, G. D. Mallory, Ottawa, Ontario; president and general manager, Defence Construction, Ltd., R. G. Johnson, Ottawa, Ont.
General Purchasing Branch: Co-ordinator, W. D. Low, Ottawa, Ontario; deputy co-ordinator, C. R. Snell, Winnipeg, Manitoba; general purchasing agent, W. J. Atkinson, Ottawa, Ontario.
Materials Branch: A/Co-ordinator, M. W. Mackenzie, Ottawa, Ontario; director, steel division, K. S. Harris, Concord, Mass., U S.A.; director, non-ferrous metals division, F. V. C. Hewett, Toronto, Ont.; director, chemical and explosives division, J. R. Donald, Westmount, P.Q.; director, petroleum division, O. G. Hopkins, Toronto, Ontario; director, priorities division, H. J. Sissons, Toronto, Ontario.
2.	H. G. Hesler, the Royal Bank of Canada, Montreal; L. D. Hudon, Marine Industries Limited, Sorel, P.Q.; K. B. Palmer, K.C., Borden, Elliott, Kelley, Palmer and Sankey, Toronto; W. T. Patterson, K.C., Canadian National Railways, Winnipeg; Crawford Gordon Jr., English Electric Company of Canada, St. Catharines, and John Inglis Company, Toronto; F. S. McGill, Dominion Oilcloth & Linoleum Company, Montreal; E. Barker, Modern Tool Works, Toronto; A. C. McDonald, Canadian Pacific Railway Company, Montreal; J. M. Cochrane, Ford Motor Company, Windsor, Ontario; A. H. Zimmerman, Moore Corporation Limited, Toronto; R. G. Johnson, Canadian Construction Association, Ottawa; C. R. Snell, Canadian National Railways, Winnipeg; K. S. Harris, Business Consultant, Boston, Mass., U.S.A.; F. V. C. Hewett, Consulting Mining Engineer, Toronto; J. R. Donald, Donald, Ross and Company, Chemical Engineers and Consulting Chemists, Montreal; O. G.
Questions
Hopkins, Imperial Oil Limited, Toronto; H. J. Sissons, Ontario Hydro Electric Power Commission, Toronto.
The other persons named in No. 1 were recruited from the government service.
3.	(a) Yes, in the case of each person recruited from industry.
(b)	C. R. Snell ($12,000); F. V. C. Hewett (retaining fee, $6,000); nil, for all other persons recruited from industry; for those recruited from civil service, salary rates were those at which they were employed prior to joining Department of Defence Production.
(c)	The lifetime of the defence production act, or until the appointment authority is rescinded.
4.	District purchasing offices of the Canadian Commercial Corporation, located in Newfoundland, Saint John, N.B., Halifax, Quebec, Montreal, Ottawa, Toronto, Winnipeg, Regina, Calgary, Edmonton, Vancouver and Victoria, have now been taken over by the Department of Defence Production and will continue to be operated by that department. Defence Construction Limited use, under contract arrangement, the facilities of the regional offices of Central Mortgage and Housing Corporation located in Halifax, Montreal, Toronto, Winnipeg, and Vancouver, and a branch office located at Edmonton.



USE OP IMPORTED EQUIPMENT BY B.C. CONSTRUCTION COMPANIES

Mr. Goode:: 1.	Has an application been received by any department of the government for the importation of wooden barges, steel barges and derricks from the United States by a construction company in British Columbia?
2.	If so, has such application been approved?
3.	Do government contracts for dredging or breakwaters in British Columbia contain a clause forbidding the use of United States equipment?
4.	Is there a "derrick and scows built in Canada" clause in the contracts now in force on the Pacific coast?


Mr. Bradley:: 1.	Yes.
2.	Under consideration.
3.	Contracts for dredging throughout Canada contain the following clause:
"The dredges and other plant which are intended to be employed on this work shall have been duly registered in Canada on or before the thirty-first day of December, 1929, or shall have been constructed and registered in Canada since the said date.
Proof of registration in writing shall be furnished when demanded."

Questions
Construction contracts do not have this clause, as the use of floating plant is usually a very minor part of a construction contract.
4.	No.



REMOVAL OF FREIGHTER SUNK IN HALIFAX HARBOUR

Mr. Balcom:: What steps have been or are being taken by the government to have the 6,500-ton freighter Trongate, sunk in Halifax harbour in 1942, raised or removed?


William Moore Benidickson: The owners of the
Trongate have been ordered to remove the vessel to the satisfaction of the department and the national harbours board, and it is expected the work will be proceeded with in the near future.



LEVY AUTO PARTS COMPANY


Mr. McGregor:: 1.	Did the Levy Auto Parts Company, Limited, Toronto, purchase any equipment or material from Crown Assets Disposal Corporation or any other department or agency of the government handling war surplus?
2.	If so, what did they buy?
3.	How much did they pay for same?
4.	Did they resell any of this equipment or material to the government?
5.	If so, what did they resell?
6.	How much did they receive for it?


Mr. Mcllrailh:: 1.	Yes.
2.
Automotive equipment and
parts	 $276,386.74
Metals, other than scrap______	1,936.50
Scrap metal and other scrap
material	 2,033.71
Machine tools	 3,050.96
Aircraft and aircraft components	 952.00
Sundry materials other than classification above mentioned (Consumer goods mechanical)	 17,785.59
Total	 $302,145.50
3. Answered by No. 2.
4. This information is not available, as the government has no record of where firms submitting tenders have purchased their stocks. In the period from February 1, 1947, to April 11, 1951, the total value of vehicle spares and equipment, both new and used, purchased from this firm, amounted to $3,485,916.78. It is, however, impossible to state what part, if any, of this equipment was originally purchased from Crown Assets Disposal Corporation, as it is understood that

this firm purchased war surplus equipment not only in Canada but also in the United States and England.
The following table shows a break-down of the above-mentioned purchases:
(a)	Vehicle spares (for all
types of vehicles)	 $ 761,398.24
(b)	Spares for Sherman tanks 419,316.30
(c)	Spares for universal carriers (a semi-armoured
tracked vehicle)	 2,297,788.49
(d)	Workshop tools and equipment	 7,413.75
Total	 $3,485,916.78
5.	Answered by No. 4.
6.	Answered by No. 4.



CANADIAN NATIONAL TELEGRAPHS


William Joseph Browne: What have been the revenues and expenditures of the Canadian National Telegraphs, Newfoundland, for the fiscal years 1949-50, and 1950-51?


William Moore Benidickson: The Canadian National Railways advise as follows:
The revenues and expenditures of the Canadian National Railways communications department in Newfoundland are kept on a calendar year basis, and this information from the date of entrustment of operation, April 1, 1949, to December 31, 1949, and for the calendar year 1950, is as follows:
Revenues and expenditures of Canadian National Telegraphs (communication systems) in Newfoundland:
	Year		Year
	1949		1950
Operating revenues ..	$ 515,632	$	929,435Operating expenses ..	745,923	1,142,395Net operating deficit .	230,291	212,960Other income-dr. ...	8,990	72,142Total deficit 	$ 239,281	$	285,102
The above figures, it will be noted, cover operating revenues and expenses. They do not include charges for headquarters administrative expense.



COMBINES INVESTIGATION ACT


Mr. Diefenbaker:: What action has the Minister of Justice taken respecting the report of the commissioner of the Combines Investigation Act, dated October 10, 1945, and entitled "Canada and International Cartels"?


Mr. Garson:: In a reply which I made on December 5, 1949, in regard to action taken with respect to recommendations contained in the report "Canada and International Cartels", a summary was given of the position at that time, and, I shall now restate the substance of that reply with the minor changes necessary to bring it up to date.
The recommendations made in the report "Canada and International Cartels" are set out in pages 66 to 69, and may be summarized as follows:
1.	Particular attention should be given by the combines investigation commission to restrictive agreements based on patents.
The Combines Investigation Act was amended in 1946 to give powers to the exchequer court to issue remedial orders in cases of use of patents or trade-marks unduly to limit production or restrain or injure trade. In its inquiries the combines investigation commission gives particular attention to restrictive arrangements based on patents.
2.	The establishment of official government records which would show from time to time any significant change in the degree of financial control which corporations outside Canada exercise over individual domestic companies.
Information with respect to this matter is compiled by the dominion bureau of statistics which, from time to time, publishes the result of its studies in this field.
3.	More adequate provision for the initiation of inquiries by the combines investigation commission into restraints of trade and unfair trade practices.
Amendments made to the Combines Investigation Act in 1946 empowered the commissioner to receive and inquire into complaints respecting practices alleged to be offences under the act or under sections 498 and 498A of the Criminal Code. Provision was also made in the 1946 amendments to restore the power of the commissioner to initiate inquiries under section 12 of the act.
4.	The building up of an effective organization under the Combines Investigation Act supported by sufficient appropriations.
The staff of the commission is now thirty-one, compared with an average of eight in 1945. Recruitment of several additional officers is currently proceeding through the civil service commission. Appropriations have increased from $61,000 in the fiscal year 1945-46 to $237,669 in the fiscal year 1950-51.
Questions
Estimates for the current year are slightly in excess of the 1950-51 appropriations.
5.	Support should be given by the government of Canada to the establishment of an international office to deal with international cartels.
Canada participated in the United Nations conferences on trade and employment which resulted in the Havana charter for an international trade organization. This charter contained provisions for dealing with restrictive business practices by cartels. The charter has not been ratified by the requisite number of countries to bring it into effect.



QUESTIONS PASSED AS ORDERS FOR RETURNS


TOBACCO


Mr. Coyle:: 1.	What was the total amount paid in taxes on tobacco in each of the years 1947, 1948, 1949 and 1950?
2.	Of these amounts, how much was paid on (a) flue-cured tobaccos; (b) other kinds?
3.	During each of these years, what amount of tobacco was exported?
4.	To what countries was it exported, and what amount to each?
5.	What was the value of the exports to each country?



PRINTING BUREAU-EMPLOYEES- RATES OF PAY, ETC.

Mr. Harkness:: 1.	How many new employees will the new government printing bureau plant have?
2.	How many employees are on the present staff of the printing bureau?
3.	(a) Where will the bureau secure its new employees?
(b) Does it propose to train them, or depend upon hiring workers from private plants?
4.	How do bureau rates of pay compare with commercial scales elsewhere?
5.	Is it proposed to have sufficient employees to meet government printing at times of peak requirements?
6.	If so, what will the bureau do with surplus personnel during slack periods?


Mr. Bradley:: Return tabled.



MOTION FOR PAPERS


John George Diefenbaker: For a return showing a list of all (a) real property; (b) buildings, sold or disposed of by War Assets Corporation to the value of $25,000 or more between the first day of January, 1946, and the first day of April, 1951, and the names and addresses of the persons to whom such sales, or disposal, were made.


Mr. Mcllraith:: Return tabled.
2270	HOUSE OF
The Budget-Mr. Brooks AGRICULTURAL PRODUCTS



QUESTION OF ASSISTANCE TO SEED GROWERS OF BRITISH COLUMBIA

[Stage Direction]
On the orders of the day:
Mr. G. A. Cruickshank (Fraser Valley):: I should like to direct a question to the Minister of Agriculture. In view of the serious situation in which the small seed growers of British Columbia find themselves, what action is contemplated by the government by way of assistance?


Right Hon. J. G. Gardiner (Minister of Agriculture):: I wish to thank the hon. member for sending me a copy of this question just before I entered the chamber. Since I did not have time to examine into all the facts relating to the answer which should be given, I should like to take the question as notice and answer at a later date.



THE BUDGET


[Stage Direction]
The house resumed, from Friday, April 20, consideration of the motion of Hon. Douglas Abbott (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, and the amendment thereto of Mr. Macdonnell (Greenwood), and the amendment to the amendment of Mr. Coldwell.
Mr. A. J. Brooks (Royal):: Mr. Speaker, the debate on the budget has been going on for some time. We have heard a number of speakers, and most of the addresses have been extremely interesting. All subjects can be discussed in the budget debate, except of course the $65 million wheat payment, on which discussion is prohibited. It is natural that both in the house and in the country there should be much interest in the budget, and it is only right that many hon. members should discuss it. It touches the lives of all our people; its effects are felt in all homes and all businesses across the country. It affects people's pleasure; it affects every phase and every walk of life. To some the budget means privation; to others it simply means the curtailing of some of their pleasures and perhaps a few of their necessities.
As I listened to the debate I noticed that most of the government members more or less praised the budget and picked out what they felt was of benefit to the government. Those in the opposition of course have criticized it, and deservedly so; to my mind it is open to much criticism. It does emphasize the fact that we are living in most strenuous times, as is indicated by (he budgets !Mr. McHraith.l

of other countries-Great Britain, France, Italy, the United States.
We have of course the fighting in Korea, which again seems to have become intensified. We have the cold war all over the world, the war of nerves, which also seems to be gaining in momentum. In addition we have in the United States a sort of civil war of words. This is something which I think must give the people in many parts of the world some cause for worry. We in Canada have always been proud to be associated with the United States as we are today. But I think we realize, as do other countries, that world leadership is something which is more or less new to our friends to the south, and that perhaps they are not as experienced as they should be in the role of world leaders. We regret, of course, that the British commonwealth of nations, which in the last two wars was more or less the leader in war and world matters, today is not in a position to fill that role, I believe the people of Canada are willing to pay their full share to meet the needs arising from world conditions, but I also feel that we should like to know just where we are going. We have been disturbed over the situation in the United States during the last week, and the people of Canada hope, as do the people in many other countries, that world affairs will not be determined by political expediency in the United States, a country which should be giving leadership- we hope it will give it-in matters of this kind.
The amount we are asked for in the budget, $3,700 million, is an enormous sum of money. Of this, over $1,664 million is to be used for defence. We realize that large sums must be spent for defence. The part we are taking now in the Korean war; the part which we must take, and indeed are pledged to take, with regard to the Atlantic pact and Atlantic defence; the part we must take in developing the defence of our own country, and also the part we must take in carrying on the general services of our country-all these make us realize that the appropriation of large sums is necessary.
A moment ago I pointed out that people in other parts of the world as well are being heavily taxed. I do not suppose that any other people are carrying a heavier burden or are more heavily taxed than the people of Great Britain. I mention this fact, Mr. Speaker, because it has been disconcerting to read recently in some of the papers-not in this country but in the United States-comment to the effect that Great Britain is not carrying her load. It might interest hon. members to know that neither Canada nor the United States can compare with Great Britain in the

matter of the weight of taxation which is imposed upon the people. I should like to give a few instances.
A low-priced car in Great Britain pays a tax of $1,180. The tax on gasoline in Great Britain is 50 cents a gallon, as compared with 134 cents paid here in Canada. We feel that we are paying an enormous tax on cigarettes, and so we are; but in Great Britain there is a tax of 52 cents on twenty cigarettes as compared with 25 cents in Canada. One could go on giving instances which indicate the great burden these people in the old country are bearing at the present time.
Britain is raising $13 billion in three years for defence. When we are told that she is not carrying her load, we need only to point out that she already has four divisions in Europe, whereas we in Canada have no troops there at all. She already has over a division in Korea. In Malaya she has troops which have been fighting now for a considerable length of time. She has troops in Hong Kong, in Iran, in Egypt, indeed in all parts of the world. This will give some idea of the burden which is being borne by that country. Since we are being asked to raise this enormous sum of money, I think the chief concern of the people in Canada today is that the money may be fairly collected from those who are most able to pay. Our second matter of concern is that this money must not be wasted but must be economically spent, and, third, we hope that the government will be able to stop inflation.
In discussing this matter in his budget speech on April 10, the minister said, as reported at page 1797 of Hansard:
In the months that lie ahead, perhaps indeed for several years, we shall face a test of nerves, of our readiness to sacrifice immediate interests for future security. This is the background against which the budget must be viewed.
Contending that his policies were antiinflationary, he declared, as reported at page 1800 of Hansard:
The essential principle in preventing inflation is to restrict the total of all expenditure, public and private, to an amount which can be met from our production and imports.
This may be sound economics, but it is unlikely to impress the average individual who thinks of inflation in terms of skyrocketing prices and1 cannot see how it will be checked by imposts such as the boost in the sales tax, which will hoist prices even higher and make it more difficult for families in the modest income brackets to secure the necessities of life. The theory is, of course, that private spending can be controlled by taxes heavy enough to balance the amount of money in circulation against the supply of goods
The Budget-Mr. Brooks available; but it does not hold water. The surplus cash raked in by the treasury is quickly distributed again in lavish government expenditures.
Some may be encouraged by the fact that the minister mentioned the need for restricting public spending as well as private. It is to be hoped that this was not merely ar, empty statement.
All Canadians realize it is imperative that the country rearm, and that this will involve tremendous expenditures, but the revenue from the new taxes should be earmarked strictly for defence, and all non-essential government expenditures should be cut to the bone.
Speaking of the sales tax, Mr. Speaker, I should like to indicate its effect not upon the people of Canada in general, but more particularly upon the people of my own province. I do not know whether it is generally known or not, but besides the federal sales tax, in New Brunswick we have a four per cent sales tax-not on essential foods, but on all other articles in general. Therefore this ten per cent federal sales tax becomes fourteen per cent in New Brunswick, and when you consider the tax on the tax on the tax, as was pointed out here the other day by the hon. member for Greenwood (Mr. Macdonnell), the sales tax in our small province becomes something in the vicinity of twenty per cent. This is a burden which is very difficult indeed for our people to bear, and no relief of any kind seems to be in sight.
I should like to consider the tax on electric goods. I can best illustrate how this tax bears on the young people, as has been mentioned in this house a number of times, by reciting an experience I had over the week end. I happened to be in the city of Montreal, and I met a young man and a young woman from my own constituency, who had left their home in New Brunswick a little over a year ago. I asked them how they were making out. They are married and have a child. They explained to me that for the past year they have been living in two rooms, but that they had hoped to get better accommodation. The cheapest they could get that was suitable was $75 a month, and they said that they had planned to buy an electric stove, and they also wished to have a refrigerator and some household furniture. They had arranged to buy and pay for these different articles, but now they find that the price of the electric stove they wished to buy has gone up fifteen per cent. The refrigerator they intended to buy has gone up fifteen per cent. There is a tax on the furniture that they intended to purchase,
2272	HOUSE OF
The Budget-Mr. Brooks and the budget which they had been operating on for the past year has now been knocked on the head, as it were, and these young people, like many thousands of others across this country, are very much concerned. They had hoped that they might buy these articles on the instalment plan, but the instalments have now been restricted by the government, and this also has upset their plans.
Another matter which the people are very much concerned about is the question of government savings. We are told time and time again that it is very difficult for members of the opposition to point out just how savings can be made in government administration. [DOT]Not knowing all the facts about the expenditures of the government, it is very difficult indeed to point specifically to individual items. Last year an hon. member spoke about savings in government publications. That is something we can all see, because day after day and week after week, whether we are in this House of Commons or whether we are at home, we receive publications from the different departments of this government, publications which are too numerous for us to read. Most of them go into the wastepaper basket. I am satisfied that the hon. member who brought this matter before the house last year was justified in saying that it was nothing but a waste of money and an unnecessary expenditure. To my mind, Mr. Speaker, these publications are nothing more or less than pamphlets for the glorification of this government, and for propaganda purposes, and they could very well be done away with.
There is also the question of reduction in staffs. This matter has been discussed in the house. In the old days, days not so long ago, most staffs were here in the city of Ottawa. We had of course a postmaster, a man in charge of the customs and a few public servants scattered about the country; but today in every village and every town across this country there is a staff of government employees. I am not saying that they should be discharged, but there should be some investigation, as there has been in the United States, to find out if all these employees are necessary.
Last week I received a letter from a man in my constituency. He had applied for the war veterans allowance. It was a clear case. There was no reason why he should not be entitled to the war veterans allowance, but over a period of three months as many as four different government officials called on this man to make sure whether he was entitled to the war veterans allowance. This sort of thing is going on all over the country.


As I said a moment ago, we should look into the question of government employees and see if many on the staffs could not be cut down.
So far as transportation is concerned there have been many changes in comparatively recent years. I recall that in my own province twenty-five or thirty years ago we had ten or a dozen steamers plying up and down the Saint John river, for instance, and its tributaries. It was practically the only means of transportation. Today there is not a large steamer on the Saint John river. The work is all done by trucks. What applies to the Saint John river I am satisfied applies to many other rivers and lakes across the country. But we still have the same expense. There are dozens of lighthouses on the river and tributaries. I have been told by many who live up the Saint John river that practically the only boats they have there are little pleasure yachts, small tugs, and so on. It seems to me this is something which should be investigated by the Minister of Transport with a view to seeing whether some savings could not be effected.
On the question of radar, I remember that when we visited the national research council last year we were told that while radar had been used previously on large steamers, through invention and science they now find that it is possible to make cheaper radar sets which can be used oni small pleasure boats and on small tugs. I understand they are also being used on fishing boats. It is likely that a great saving could be made if this question were investigated with a view to adopting safe and up-to-date aids to transportation and doing away with outdated methods.
I see the hon. member for Inverness-Rich-mond (Mr. Carroll) in his seat, and I should like to make one or two comments on his speech of a few days ago-it has been referred to already by the hon. member for Cape Breton South (Mr. Gillis). The hon. member for Inverness-Richmond is very fortunate- indeed he is more fortunate than most of us from the maritime provinces, and perhaps for that reason he can look in a more detached manner upon our situation down there. A few days ago he said that the people of the maritime provinces were more or less to blame for the situation in which they found themselves.


Mr. Carroll:: Mr. Speaker, I am sorry that the hon. member is following in the footsteps of the hon. member for Cape Breton South.
I did not discuss the maritime provinces at all in connection with confederation and industries. My sole theme was the province of Nova Scotia.


Alfred Johnson Brooks: It is a queer thing to me if Nova Scotia is not a maritime province. What applies to Nova Scotia applies also to New Brunswick and to Prince Edward Island, or to any of the four maritime provinces. The hon. member was speaking about Nova Scotia, and he made light of the decentralization of industry. He said it would be foolhardy for anyone to stand in his place and say that governments or government policies could have anything to do with the decentralization of industry, and contended that it was entirely a matter for the provinces.
I agree with the hon. member that it is not possible for this or any other government to go to a large concern and say: you must send part of your factory down to New Brunswick, or Nova Scotia, as the case may be. We do not say that, nor do we believe it. But we do say, as was pointed out the other day, that before confederation the people of the maritime provinces were prosperous, and after confederation dozens, yes hundreds of industries, left the maritimes and came to central Canada. We contend that it was policies of the federal government which caused the loss of industries in the maritime provinces.
We are not asking this or any other government to force individual companies to send branches to the maritimes, but we are asking that freight rates, fiscal policies, and other matters under the control of the federal government be handled in such a way that it will be profitable for industries to disperse their plants and to go into the maritime provinces. It was the policy of the federal government which drove them out, and we believe a policy can be evolved which will send them back.
Let me point out some of the disadvantages of centralization. If the hon. member for Charlotte (Mr. Stuart) is in his seat, he will recall that for many years there was in the town of St. Stephen a soap factory. A few years ago Lever Brothers obtained what amounted almost to a monopoly of the soap industry in this country, with the result that the factory was closed and was moved to Ontario. This meant less purchasing power in St. Stephen. It meant a loss of business; it meant that those whose employment depended on that factory had to take their families away. That is one of the results of of centralization.
Then let me illustrate the principle of decentralization. Only last year it was decided to build a cement factory in my constituency of Royal, at a place called Havelock, with the result that today the Canada Cement Company is building a plant there. It will
80709-146J
The Budget-Mr. Brooks employ about three hundred persons. The village today has a bank and a theatre; it has enlarged its schools; the merchants are prosperous, and the farmers of the area have a market in which to dispose of their goods. That is what decentralization means, Mr. Speaker. As I said a moment ago, we had a bitter experience with centralization.
I should like to discuss for a few moments an item which appeared in the press a few days ago with regard to an interview given by a member of the Nova Scotia legislature who was paying a visit to Florida and reported in the Florida press. Had he been an ordinary visitor the press and the people of Canada would have disregarded it. However, since he was a member of the Nova Scotia government there was more inclination to take his remarks seriously. The press report states that Mr. Harold Connolly, on his visit to Florida, predicted the union of Canada and the United States within a quarter of a century. I believe I know as well as anyone the people of the maritime provinces, particularly those in my own section, and I would say that not ten per cent of them want Canada to become part of the United States. He went on to say, as indicated in the press report:
The people of Canada have a greater affinity for the United States than for Britain.
I do not know where he gets his information. The report continues to quote him as follows:
The people of these two countries speak the same language, think along the same lines . . .
In Canada we speak two languages, both French and English; and I am satisfied that if within twenty-five years we became part of the United States we would not retain those two languages; rather we would all speak one language, what might be called the American language.
I have referred to this matter because I feel that Mr. Connolly was talking through his hat-or perhaps he was affected by the extreme heat of Florida, in contrast with the cold climate of Nova Scotia.


Mr. Dickey:: Mr. Speaker, on a question of privilege, apparently the hon. member is quoting a recent press report. I am sure if he will read the explanation of that report, which has been given due publicity in the same paper, it will be clear to him-


Some hon. Members:: Order.


Mr. Speaker:: Order. I do not think that is a question of privilege.


John Horace Dickey: Well, Mr. Speaker-


Some hon. Members:: Order.

The Budget-Mr. Brooks


Some hon. Members:: Sit down.


Mr. Speaker:: Order. If the hon. member would like to speak in the debate, provided he has not already done so, he will have that opportunity at some time after the hon. member for Royal has concluded his speech.


Alphonse Fournier: May I ask the hon. member a question? Does he know that Mr. Connolly denied that statement?


Alfred Johnson Brooks: I have not seen any report which indicated that Mr. Connolly had denied it.


John Horace Dickey: Read the papers, then.


Alfred Johnson Brooks: He may have tried to deny it; I do not know. However, I should be more inclined to take the view of Professor Love, of the university of New Brunswick, in the matter. A press report of the speech by Professor Love, delivered at Orono, Maine, on April 19, states:
The determination of Canadians to retain a distinct national culture, and their hope of thereby providing a strong link between the United States and Britain, were expressed here today by Prof. Robert J. Love, who is head of the department of education at the university of New Brunswick and was addressing a group of students and educational leaders at the conference on Canadian-American affairs being held here under the sponsorship of the university of Maine.
Then the report quotes Professor Love in these words:
"There were many influences of the United States on Canada, but we are distinctly Canadian and intend to stay so," he said. "We want to stay Canadian, not because we don't like the United States, but because we feel we can accomplish more, contribute more, on that basis." He went on to point out that one of Canada's particular contributions would be to act as a strong bond between the United Kingdom and the United States.
In my opinion that expresses the situation quite clearly as to how we feel in Canada. .
In closing I should like to refer to a matter that particularly affects my constituency. In the course of this debate we have heard some excellent addresses on dairying in Canada. We regret the position in which the dairy interests of this country find themselves. This is so particularly in the valley of the Kennebecasis in New Brunswick.


An hon. Member:: Where is that?


Alfred Johnson Brooks: In my constituency of Royal, one of the finest dairying counties in eastern Canada, and I think one of the finest in all Canada. There are three large butter factories in my constituency. There is the Sussex Cheese and Butter Company; there is the Millstream dairy, and there is the Harvey dairy at Hampstead on the Saint John river. The butter factory at Sussex had the distinction a few years ago of making more butter
fMr. Dickey.]
in one season than any other factory in Canada. That will give hon. members some idea of the extent to which our part of the country is interested in dairying. The town of Sussex, my home town, has been known as the buttermilk town.
What the hon. member for Hastings-Peter-borough (Mr. White) and the hon. member for Lanark (Mr. Blair) pointed out with regard to their constituencies is true also of our part of the country. Because of the high prices obtainable for dairy cattle,, many farmers have been selling their herds, with the result that there is not as much dairying going on. Many young men who are purchasing farms with the idea of going into dairying find it almost impossible to buy dairy cattle today, because they cannot afford to pay $300 or $400 a head for them. A total of 47,000 were sent to the United States last year and, practically the same number the year before. Many thousands more will be sent this year, with the result that dairy herds will be considerably depleted in some parts of the country.
The dairy industry is suffering severely from these conditions. I should like to advocate what was advocated by the hon. member for Lanark, that something be done in this connection, that a floor price of 62 cents be placed under butter as requested by the dairying industry. I hope that the Minister of Agriculture and the government as a whole will give serious consideration to this matter, which is so important to dairy farmers of my constituency as well as to the dairying interests across Canada.


Mr. James Sinclair (Coast-Capilano):: Mr. Speaker, in rising to take part in this budget debate I intend to limit myself to a discussion of matters which were dealt with in the budget presentation of the Minister of Finance (Mr. Abbott). So far, various members have spoken of problems affecting their riding, which is a common practice in the budget debate. There are some problems in my riding which I should like to air, but I shall not do it at this time, for fear that the hon. member for Kamloops (Mr. Fulton) may be in confusion as to whether I am speaking as the parliamentary assistant to the Minister of Finance or as the member for Coast-Capilano.


Mr. Fulton:: A lot of us are confused when you speak.


James Sinclair: I am going to do my best
to enlighten the hon. member, if that is possible, during the course of this speech.
In his budget speech the Minister of Finance gave a comprehensive review of the

economic position of this nation. He indicated the steady growth that Canada has undergone since the end of the war. He indicated the financial measures which the government feel they must take in order to pay for our greatly increased defence expenditures and to take part in the joint defence of freedom to which this country is committed.
I think the people of the country appreciate that the budget is a tough but realistic one. Actually I think they expected it to be much more severe. I think they appreciate that the Minister of Finance had laid a heavy load on the people of this country but it has been laid fairly. To my mind no better evidence of this statement can be found than what was contained in the leading editorial of the Toronto Telegram the day after the budget presentation. As hon. members know, the Toronto Telegram is the one true blue, unswerving champion of the Progressive Conservative party. This editorial starts off as follows:
Budget lays Heavy but Even Burden
As a budget designed to raise revenue on a fair basis to pay for defence costs that all recognize must be met. Mr. Abbott has done a creditable job.
Then they go on to analyse the various proposals in the budget, and they conclude with the following words:
In laying a heavy burden on the Canadian taxpayer Mr. Abbott has judged that the country realizes the need for a strong defence, and in the main he has laid the burden evenly on everyone's shoulders.
Since the introduction of the budget various members of the opposition have criticized certain of the tax proposals. Those of us who sat in the budget committee knew long before the budget was introduced into the house from what direction these attacks would come. The C.C.F., of course, would criticize the corporation tax, that we were not soaking the companies enough. Both parties would recoil in horror from any increase in the personal income tax. They would decry our policy not to increase taxes on that luxury, liquor, and at the same time they would oppose our putting increased taxes on those necessities, cigarettes. They would call the cut in the tax on candy appeasement of the children. We knew that the tax on electrical appliances would be labelled by the opposition as a blow to the Canadian home. Above all, we knew that the two per cent increase in sales tax would never be referred to as a two per cent increase but as a twenty-five per cent increase.
We knew these things would come, because the function of an opposition is always to oppose all tax measures and never to suggest any alternative tax measures. Let me turn, therefore, to each of these items.
The Budget-Mr. Sinclair
First, let me recall to hon. members that the task facing the Minister of Finance this year was to raise an extra $400 million to meet those defence costs which have been so thoroughly endorsed by members of this House of Commons. The primary purpose of this budget is to raise revenues; the secondary purpose of these tax measures is to curb unnecessary spending in order to make goods and materials more available for defence needs. In this task the minister has tried to spread as fairly as possible the load upon the Canadian people.
Let me turn first to the corporation tax. That, of course, was the field of main attack by the leader of the C.C.F. (Mr. Coldwell). At the end of the war we had an 18 per cent corporation tax, plus a 100 per cent excess profits tax. That was changed later to a flat 30 per cent corporation tax which was applied to all the profits of corporations. Later, as a measure of encouragement to small companies, we changed that tax to 10 per cent on the first $10,000 of profits, and to make sure that the country did not lose revenue because of this change we increased the tax on the bigger corporations to 33 per cent. That was the tax in effect on corporations of this country at the time of the Korean aggression. The baby budget last fall provided for an increase in taxes to meet added defence costs, one being an increase of 5 per cent in corporation taxes as well as a substantial increase in the liquor taxes. The corporation tax was then 15 per cent on small companies and 38 per cent on big companies, plus the 5 per cent tax which we collect for eight of the provinces, and in the case of Quebec and Ontario plus the 7 per cent tax which they levy. Now, again to meet still added defence costs, the minister has imposed a surcharge of 20 per cent on this corporation tax rate.
Why a surcharge? There are good reasons for a surcharge instead of another change in the rates. In the first place it leaves the existing tax structure unaltered. Whatever tax is payable under the old plan, in the end 20 per cent more is payable. The second reason I think is good psychology; it is that every corporation

and the same applies to individuals-in making out its tax return may have again impressed upon it the cost.of the defence program, because this is a defence surcharge. If conditions in the world improve that 20 per cent surcharge can be lowered. If conditions get worse it may be necessary to increase it. We did not put the surcharge on the small corporations; but that now lifts the corporation tax payable in Canada to 50-6 per cent on gross profits in eight of the provinces and to 52-6 per cent in the two central provinces, where incidentally most of
2276	HOUSE OF
The Budget-Mr. Sinclair the corporations are located. This means that in Canada today we are taking more than half the gross profits of the corporations. It means in effect that the people of Canada are the major shareholders in every successful corporation. Of course if they do not make money it is their own money they lose, but we are now taking more than half the profits of the successful corporations of Canada.
The leader of the C.C.F. party asserts that we should be taking still more. He complains of rising profits, and suggests that a cut in those profits would mean a cut in prices. I am indebted to the editor of the Montreal Gazette for calling to my attention an excellent publication put out by the British Labour party entitled "This cost of living business." You know, over in Britain the socialists are in power, and they have the same problems as far as inflation is concerned as the Liberals have in this country. The publication to which I refer is not a government publication. It is not an official publication of the Labour party. It is * pamphlet turned out for the benefit of their supporters, so they may have some of the answers to give the people who are complaining about this high cost of living. I would recommend the pamphlet to every hon. member of this house, because it will show the difference between the thinking of the socialists who are in power and socialists who are not in power. You will realize, of course, that the British Labour government, like the socialist government in Saskatchewan, have learned some bitter lessons while in power. In Saskatchewan they learned those lessons through their boot factory and their blanket factory. In Britain they learned them through the ground nuts scheme in Tanganyika and the poultry scheme in Gambia. The portion of this pamphlet to which I want to direct particular attention, however, is the part relating to profits. All hon. members have heard the socialists in this country denounce the profit motive. They would work for production for use, not for profit. The socialists of Britain were no different until they got into power, but this is what the pamphlet says:
Profits cater for the creation of reserves to pay for expansion and re-equipment, and the additional money manufacturers want to pay dividends to their shareholders. The more money firms put aside to develop new methods of production, the more consumers have to pay now for goods. But new equipment and better laid-out factories mean more efficient production, lower costs, and the possibility of lower prices in the long run. If the money to pay for this were not raised from profits it would have to be raised in some other way.


Something most of us knew a long time ago.
When prices are rising, and both production and sales increasing as at present, profits are likely to be relatively high and rising. This is not to say that ail firms or all industries will be making profits. Most consumer goods are made by a fairly large number of firms, the profits of which vary between the leading and the less efficient firms.
Profits tax prevents the accumulation of excessive profits. The proceeds of this taxation help to pay for food subsidies, social services and other instruments of community welfare.
Then what can be done in reference to limiting profits?
Can we, then, cut profits?
First, it has been explained that, to the extent that profit makes provision for re-equipment and new building, it is an element in increasing efficiency in industry which, in the long run, should make price reduction possible. This leaves then that part of the profit which is distributed to shareholders.
A reduction in distributed profits could do little to reduce prices. They are a very small part of the cost of any item so, although there are very many excellent reasons for dividend limitation and profit control, their effectiveness as a means of reducing the cost of living is not one of them. Even if profits were eliminated altogether there would still be a cost of living problem.
If the leader of the C.C.F. does not want to learn from the experience of the Labour government in London, I have another suggestion to offer. It is a suggestion I have made in the past. I am always amazed that those who speak for the socialist party about business, business profits, corporation taxes and so on, are those who have had absolutely no experience with them. I would like to see the leader of the C.C.F. party put up the hon. member for Moose Jaw (Mr. Thatcher) or the hon. member for Yale (Mr. Jones), both extremely successful businessmen, and let us have their views on whether or not we are taxing corporations enough. Let us have their views on whether it is possible for business to evade taxes or to ease the burden. I make it a point, of course, to talk to as many people in business as I can and get their reaction to tax changes, and I have spoken to the hon. member for Moose Jaw.
I am sure he will not think I am abusing any confidence when I say he gave me a new wrinkle after the last tax change went through. He said, "Abbott is now the major shareholder in my company. He takes 50-6 per cent of the profits, and more than that he takes it in cash payable immediately. I am left with accounts receivable, stock on hand and the investment I put into the business."
The next point is this matter of the limit of 5 per cent, which the leader of the C.C.F. also criticizes; that is, that the surtax should not cut the profits of any corporation to less

than 5 per cent of the capital employed. The reason for this is very simple. There are corporations in this country whose profits are limited by federal, provincial or municipal regulation. I refer to the group of corporations generally called public utilities. Their profits are limited; the rates they can charge are tied in with the profits, and when we levy a heavy tax rate on corporations like that of course we greatly reduce their earning power. That is a bad thing if at the same time we are expecting those companies to expand. Today, with defence needs what they are, we are expecting the power companies of this country to greatly expand their facilities for the production of electrical power. We are expecting these corporations to improve their transportation facilities. That requires more capital. They certainly are not going to get it from profits, because their profits are limited, and since we have increased the tax they have great difficulty borrowing in the open market. Who will put money into a corporation where the profits are so limited when he can just as easily put it into other industrial stocks which are making higher profits? That is the reason we have this safeguard that the surtax shall not reduce the profits of those public utilities corporations to less than 5 per cent.
The third point in connection with corporation taxation is this change in depreciation, this deferred depreciation. It is a direct consequence of the fact that we are now taking more than half the profits of a corporation. Once we do that we cross a psychological barrier and get into the field of excess profits tax thinking. The businessman thinks the government is taking more than half his money. Then, of course, he is an easy victim to those salesmen who try to load him up with every type of frill for his business, electric typewriters, fancy chrome fronts and all that sort of thing, with the thought that the government is going to pay for half of it out of profits and the depreciation will take care of the rest. It was to stop needless expansion of unessential industry at this time that the minister announced this plan, not to halt depreciation but to postpone depreciation on such items for four years. The choice is the choice of the individual businessman. If he chooses to go ahead, that is his choice; but he will get no depreciation on it until the four years are up. Curiously enough the British, in their budget presented the same day, arrived at almost the same device to halt needless expenditure in unessential business.
I should like to finish this corporation tax with just one other item for the leader of the C.C.F. party. Actually Canada taxes
The Budget-Mr. Sinclair corporations much more heavily than does the Labour party in Great Britain. Until this budget the British had a tax of 30 per cent on distributed profits, that is dividends paid out. In the last budget, that was raised to 50 per cent. We, however, have this tax today of 50-6 per cent on all profits paid out or not. If they are paid out as dividends, they then become subject to the personal income tax which ranges from 15 per cent in the first bracket to 80 per cent in the top bracket. If the eventual recipient of those dividends dies, then we take another crack at it in the form of very heavy succession duties. On the other hand, if the corporation itself chooses to keep half of those profits in the form of adding to the capital, we charge them 15 per cent.
I turn now to the personal income tax and the 20 per cent surcharge. It was put on for exactly the same reasons as I mentioned in connection with the corporate tax. It would not alter the existing tax structure, but it would be a constant reminder to every Canadian that the defence of freedom is not free. There is a price that we must pay for these things. Of course, we expected an immediate revival of the exemptions bidding and criticism of our political opponents as we had later in 1949. We had the Tories bidding $1,200 and $2,400 in 1949, and we had the C.C.F. bidding $1,500 and $3,000 as exemptions under personal income tax. Those bids have been repeated. The only interesting thing about it is that the member for Hastimgs-Peterborough became a little confused and though a Tory he made the C.C.F. bid of $1,500 and $3,000.
I should like to turn now to the subject of the surtax and those exemptions. The most curious charge in connection with the surtax was made by the leader of the C.C.F. (Mr. Coldwell) and the member for Assiniboia (Mr. Argue) when they said it was not progressive. This is not just progressive, it is violently progressive.. We will take an example of $100 of taxable income in the first bracket and then in the top bracket. In the first bracket, $100 at the old rate of 15 per cent will take $15 out of the hundred leaving him $85 income. At the new rate, with 20 per cent surcharge added, he pays $18 tax. He is left with $82, so he has suffered a cut in income from $85 to $82, 3-5 per cent. Let us take $100 in the top bracket, the 80 per cent bracket. Under the old tax rate a man had $20 left. We increased the 80 per cent by 20 per cent to make it 96 per cent, so he is left with $4. In other words, the income he received has been reduced from $20 to $4, am 80 per cent reduction in his income. That is not just progressive, it is so violently progressive
HOiJSE OF
The Budget-Mr. Sinclair that, as the Minister of Finance (Mr. Abbott) pointed out in his budget speech, we cannot go on with that level of surcharge. If it is necessary to raise additional taxes there will have to be a change in the base rate.
I should like to consider the commodity taxes now. To start off, of course, there is liquor. Hon. members generally, except the Conservatives, deplored the fact that we had not increased the tax on liquor. An expression used was that liquor was going scot-free. I want to tell you today that liquor is one commodity on which we have never reduced the taxation, even in the glorious days of the sunshine budget. Liquor was the first commodity we hit in the baby budget. Today a bottle of rye whisky which the distiller sells to the liquor control board for $1.10 costs the consumer $4.25, a 300 per cent mark-up on the manufacturer's cost; that is certainly not "scot-free". We have felt from an examination of our tax records that the point of diminishing returns has almost been reached so far as the liquor tax is concerned. It is aggravated by the condition that there is such a disparity between the cost of manufacture and the cost of sale, and when the actual manufacture is a fairly simple process. You always have the threat of widespread bootlegging and moonshining. It was for these reasons that in this budget liquor was left untouched.
If we had any doubts about how right our position was, it was certainly put at ease by a statement made by Premier Frost, who after all is the only Conservative premier in Canada today, and is generally regarded as' the white hope of the party. In the legislature in Queen's Park, he had this to say about the liquor tax:
My own preference would be in favour of the federal government making some suitable arrangements to vacate the liquor tax field, so that the provinces would not only have the problems but the revenues. Indeed, I now express the hope that the federal government will make a start by not imposing new taxes in this field.
Then he added later:
The province of Ontario might be pushed into a $10 million deficit by further federal taxation of liquor.
Then later he added:
I have expressed these views to the Minister of Finance and others, and have stated them publicly, and I take this opportunity of reaffirming my position.
Well, that was one of the reasons why the liquor tax was not increased.
I have had much pleasure in sitting as a listener during the last two dominion-provincial conferences. I think one of the great tributes which can be paid to the Prime Minister (Mr. St. Laurent) is the harmony
(Mr. Sinclair.]

which now exists between the federal government and the ten provinces. It was for that reason there was no consideration at all given in this budget to moving into some of the joint fields in which we were during the last war, such as the amusement tax, parimutuel tax and gasoline tax. At the moment we are leaving those to the provinces. Mind you, this is not a tax matter so far as the provinces are concerned. They are in the business of selling liquor just as any other concern who is in business in Canada selling any commodity. They are appealing to us for tax relief in the same way as any other business group comes to the Minister of Finance and puts forward special pleas as to why their commodity should not be hurt so far as extra taxes are concerned.
There was another reason which I think would not have affected the thinking of the Minister of Finance but which is in the background as far as such members as myself are concerned. Suppose we had increased the liquor tax and Premier Frost, who is also the provincial treasurer, had had a deficit of $10 million: we might have been accused of deliberately dulling the lustre of the only good leader the Tories have in the field at the present time. We have preferred to leave that job to the hon. member for Ontario (Mr. Thomson), who will do that job this year.
Taking candy as the next item, we had tangible evidence of the law of diminishing returns here. In the baby budget we imposed a 30 per cent tax on candy. The candy manufacturers were able to show through their sales, and the Department of National Revenue could see from the tax collections, that the tax was too severe in relation to the tax on other industries. They were suffering a steady loss of income. It was for that reason that the tax was cut from 30 per cent to 15 per cent. It has always been the intention of the Minister of Finance to spread the tax load fairly across all industries. If a mistake is made, it will be corrected, as we have corrected this.
The excise taxes are the next group, and I think there is fairly general agreement that the increase in tax from 15 per cent to 25 per cent on luxuries and semi-luxuries was necessary. There was, of course, a protest on the special 15 per cent tax increase on electric stoves, refrigerators and washing machines. Well, that tax was imposed, first of all, for the same primary reason as other taxes, for revenue. The second reason was to check spending on goods with defence content. The spending on these items has been amazing in the last few years. The Minister of Finance put on the record some of the increases in sales in individual goods,

not dollar sales. Refrigerator sales, for example, last year were double the previous year and three times the year before. These articles, of course, are articles which do use a great deal of material which is extremely necessary for defence. We think of steel first of all. There is another one, though, copper. Some of you may have seen the quite striking advertisement appearing in most of the United States magazines this month, by the Anaconda Copper Company, the greatest primary producer of copper in the United States and one which generally does not advertise in consumer magazines. The advertisement is headed:
How many rounds can your kitchen shoot?
Then they go on to say:
It takes all the copper in your kitchen-in your rrfrigerator, range, washer, mixer, toaster-to make tne ammunition a -50 calibre machine gun fires in le s than a minute.
Thi- fantastic ratio of war to peace-one B-29 to 1,670 electric ranges, one tank to 47 refrigerators- is a problem that is straining every resource of the copper industry. Despite this enormous effort, it it imoos'ible to provide enough copper, brass and b-onze for our military needs and all our civil an wants as well.
The taxes on these things are regrettable but necessary. I think indirectly however this indicates a great rise in our standard of living when members here assert that it is the almost inalienable right of every young Canadian couple who get married to have an electric refrigerator, an electric washing machine and an electric stove. I do not think many members of this House of Commons started out in married life with those possessions.


Mr. Cardiff:: Would you like to go back
twenty-five years?


James Sinclair: Now I come along to the sales tax. The minister, in his own presentation. brought it up by detailing expected revenues and showing that he was still $100 million short of meeting the extra defence expenditures which had been approved by this house, and therefore there was the remorseless necessity of increasing this basic sales tax. We did not change the base. That fact must be repeated. The sales tax today does not apply to food, fuel or building material. Each year we have widened that base. The minister put on the record the dominion bureau of statistics' estimate that only one-quar.er of the expenditures of a low income family are today subject to sales tax. But other members, such as the hon. member for Greenwood (Mr. Macdonnell) for example, traced the change in the sales tax over the years-the steadily mounting sales tax-and inferred that it was owing to government extravagance. Let me also point out other
The Budget-Mr. Sinclair things that have happened over the same years as the increase in the sales tax: Family allowances, $300 million; old age pensions, another $100 million; a national health program, $35 million. Those three items alone cost more than the $400 million which is raised today by the 8 per cent sales tax. I cannot help but think that the quotation from the minister on this point, as reported at page 1815, should be repeated in Hansard:
It is an inexorable rule of life that we can never really get something for nothing. Nothing is really free. Everything worth while has its costs. Tonight is the annual occasion when we count up the cost of our policies in terms of money. That cost is high, but failure to achieve our objectives of peace, security and financial integrity would involve infinitely greater and more painful cost.
The one suggestion that the hon. member for Greenwood had was that we could have avoided this increase in sales tax if the government would practise economy, if they would stop needless waste, extravagance and unnecessary expenditures. Early this session I made quite a long speech on this subject. The speech was prompted by the speech of the leader of the opposition (Mr. Drew) out in Saskatoon, in which he said that he could save or lop off half a billion dollars from government spending, without affecting defence spending or necessary civilian services. In this house I repeated the challenge to him. I asked for the co-operation of every member of the house in indicating where the savings were to be made; because the Minister of Finance (Mr. Abbott), as chairman of the treasury board, is more anxious than anyone else in this country to see such savings effected. Since that time I have been keeping a careful note here on my desk. Every time a Conservative member spoke, I listened for practical specific suggestions with respect to economy.


An hon. Member:: And you did not get any.


James Sinclair: I did get one. I got almost one from the hon. member for Comox-Alberni and today the hon. member for Royal, who spoke before me, made the second practical suggestion. He said that from his own knowledge in his own riding he thought that perhaps, because of changed conditions, we could do without some of the lighthouses on the Saint John river. When I spoke earlier, that was the very thing that I invited hon. members to do. They have the best knowledge of conditions back in their ridings, as to what facilities are no longer necessary, and what facilities have superfluous staff. I sincerely thank the hon. member for bringing forward the only tangible and specific economy suggestion mentioned by the Tory party this session. It is true that members

The Budget-Mr. Sinclair of the opposition talk in resounding phrases about needless expenses for publications and travelling expenses. The hon. member for Northumberland (Mr. Robertson) the other night pricked the bubble of this claim with regard to travelling expenses made by the hon. member for Eglinton (Mr. Fleming). The hon. member for Eglinton pointed out that despite these economies, travelling expenses are up $8 million; but the hon. member for Northumberland showed that they were up $8 million entirely because of added defence and defence production expenses and because the Royal Canadian Mounted Police had taken over another province, namely British Columbia. The Tories talk about publications and publicity generally, but never specifically. A little earlier this session I put through the Farm Improvement Loans Act, and two hon. members asked: How do farmers know about this. They do not seem to know enough. We should have more publicity. The hon. member for Huron North (Mr. Cardiff)-


Lewis Elston Cardiff: I am right here.


James Sinclair: Yes; so I see. I said that we had not spent a great deal. He said, "You should be spending more on publicity." He is quite right and we are. When the Tories get down to specific instances, they find that the expenses are justified. So they content themselves with making these sweeping charges about extravagance, needless expenditures, Hoover commissions and halfbillion dollar savings. There is one place where they might get any information they please about any expenditure the government has made, audited by the controller of the treasury, audited by the Auditor General; that is in the public accounts committee. That takes hard work, of course. You cannot go in on a fishing expedition, as some of them do-open the book on public accounts and say, "What does this mean?" They should have had all the data that they could receive from the minister by way of orders for returns, from the department by way of letters, and from their constituents by way of knowledge of the services before they enter public accounts committee to ask about items. But let us see just what is the attendance of these economy-minded Conservatives on the public accounts committee. They have ten members on the committee headed by the leader of the opposition. In the meetings so far they have had in attendance three members, three members, six members, four members, four members, three members, two members; and never once has the leader of the opposition bothered to attend a meeting of the public accounts 

committee. He prefers of course to speak back in Saskatoon about half-billion dollar savings. He prefers to make these resounding speeches about extravagance and needless expenditures but never once to mention one specific economy. As I said when I spoke earlier, I was looking for suggestions for economy which these Conservatives were making and here I have three solid pages of notes which indicate that almost every member over there, some time since this session began has made, not suggestions for economy but rather many, many suggestions to increase government expenditures. I see that my friend the hon. member for Lake Centre (Mr. Diefenbaker) is in his place. I think he is the only personal friend I have in the Conservative party. He made a great speech in this house just a couple of days ago, and in it he did two things. In the first place, he decried government savings as far as the civil service was concerned; they were paltry, he said-5 per cent. Economy has to start somewhere.


John George Diefenbaker: I spoke of the post
office employees.


James Sinclair: Yes, he spoke of the post
office; that is quite true. Yet the post office is the biggest employer of labour in the government service. How are you going to make economies in the civil service if you do not do so in the post office which is the biggest employer? But while he wants to cut expenditure, and so save taxes, he says we are not doing enough in the Colombo plan and that, instead of spending $25 million, we should be spending $50 million. Fifty million dollars is one per cent on the present sales tax.


John George Diefenbaker: Mr. Speaker, I did not
say that, as a matter of fact. My hon. friend apparently did not realize that I made no such statement the other day. Some weeks ago, in the course of a speech, I suggested that this was one expenditure that would be part of the defence expenditures of this country. I suggested $50 million. The government decided on $25 million. I raised no objection in any way the other day.


James Sinclair: That is just my point. While that speech was on the radio, the speech the other day was almost the same, with the exception that in the one on the radio the hon. member advocated $50 million, but in the house just inferred it. Again desirable, I agree, but these are expenditures which do not decrease the tax rate of the Canadian people; they increase the tax rate of the Canadian people. The Liberal members of this house are willing to advocate such things, but they are also willing to have the necessary taxes to get these things. The

members of the C.C.F. also are very keen in advocating increased expenditures, but they do say the money can be found by soaking the corporations, or by running business themselves. Even the members of the Social Credit party have their solutions, and they tell us how money can be found. Only the Conservatives keep insisting on still greater expenditures in this house, but never suggest one means by which a specific saving can be made, except that the hon. member for Royal (Mr. Brooks) today suggested we could do away with certain lighthouses, and the hon. member for Annapolis-Kings (Mr. Nowlan), speaking as the national chairman of the Progressive Conservative party, opposed the St. Lawrence seaway last week. We Liberals do think that the St. Lawrence seaway, which will cost us half a billion dollars, is a necessary and worth-while expenditure for all Canada. But it was nice to have on record the fact that the president of the national Progressive Conservative association, speaking in this House of Commons, opposes officially the St. Lawrence seaway. That is one economy on which the Tories have agreed.
I now want to make a few remarks on propaganda. In the old! days of parliamentary debate facts were countered by facts. It is true that some people shaded the facts, and some people quoted only the facts that suited them. But in the 1930's a new technique was developed by Joseph Goebbels, namely the technique of the big lie. Tell a big enough lie and tell it often, never quote facts, and in the end you will get perhaps the ignorant and the credulous to believe you. The Russians have picked it up. "Russia wants peace; Russia wants peace. The west wants war; the west wants war; the South Koreans and the United' Nations are the aggressors; the North Koreans are defending themselves". Repeat it endlessly and you may bring convictions. The one essential in this is to hammer away incessantly on the big lie, never support it by facts. Ignore facts, hoping to get the credulous, the ignorant and the misinformed to believe you. Today in Canada, the national Progressive Conservative party has adopted the technique of the big lie. They are barren of policy, devoid of an appeal to the Canadian people, unhappy in their leadership-


Mr. Tustin:: Nonsense.


James Sinclair: -and so they have turned to this one great charge, "the government is extravagant; the government is wasting money; the government has needless expenditures"; but never do they come forward with tangible items saying: We will cut this out. Never do they restrain themselves from
The Budget-Mr. Sinclair making other demands on the treasury, they make endless bigger demands. I think the Canadian people are too well informed to fall, as did the Germans and as have the Russians, for the technique of the big lie. I think they have a great admiration for the great job, and the courageous job which has been done in connection with the finances of this country, both in war by the Right Hon. J. L. Ilsley, and in the difficult days since the war by the present Minister of Finance (Mr. Abbott).
It would have been a very easy thing in these recent years, since the Minister of Finance has had surpluses, for him to have done one of two things: to have cut taxes across this country to make a good fellow of himself-


An hon. Member:: He did on the eve of an
election.


James Sinclair: -or, second, to have said yes to all those demands of the Conservatives for expenditures on Passamaquoddy and bigger subsidies on grain and hogs and cheese, and bonuses on gold, on floor prices for potatoes, on cheese and all the many things that they have advocated without ever mentioning the taxes to pay for them. Instead he chose to follow the path that any prudent Canadian, be he farmer, fisherman or businessman, has always followed. In good times, you pay off your debts. I think the most glowing tribute to the present Minister of Finance has not been said in glowing words in this debate but is found buried in the cold statistics of the public accounts. Page 50 of the public accounts shows the debt position of this country. Since 1867 to 1946 in only 15 years did we pay our way and have a surplus. The surplus in all those years totalled $300 million. Since the minister became Minister of Finance, in 1946 in the five budgets that he has presented every year we have had a surplus which has been applied to debt reduction. When he became Minister of Finance our net debt was $13,400 million. Today after reductions of five years of almost $2 billion-that means almost $60 million a year in interest charges saved- our net debt is $11,400 million. The people of Canada measure up that record of courage, that record of performance, against this Tory technique of the big lie, these continued, aimless charges of extravagance, waste and endless expenditures, and the position of the people of Canada today is the same as their position in June, 1949, when they gave such great endorsement to this government.


Mr. J. A. Charlton (Brant-Wentworth):: Mr. Speaker, taking part in the budget debate one hesitates to take the time of this house

The Budget-Mr. Charlton to repeat many of the things said previously, but in some cases they bear repeating many times. The previous speaker has seen fit to repeat many of the things that the opposition have been saying on the matter for the last week. Whether his hindsight is better than his foresight remains to be seen. So far as the hon. member for Coast-Capilano (Mr. Sinclair) is concerned, I should like to tell him that if he would like to go back forty or fifty years, when he suggests that many hon. members did not have refrigerators and electric stoves when they started housekeeping, and for that reason probably the young couples today should not desire to have these things, I do not agree with him.
He also accused the party to which I have the honour to belong of the technique of the big lie. People in glass houses should not throw stones. The Progressive Conservative party at least say the same thing in the House of Commons as they do outside.


James Sinclair: George Valade!


John Alpheus Charlton: I wonder whether that can be said of many of the ministers of the crown in the past six months, because we have an instance of statements being made in the House of Commons when the education resolution was up for discussion some time ago, and the Liberal members all voted against that resolution, and one of the ministers saying outside that the government is prepared to give federal aid to education. Is that misrepresentation, or holding a carrot in front of the people on a stick?
Certainly the opposition is not the government. It is up to the government to bring forward a policy and to defend that policy. Certainly it cannot be said that the government has not all the powers necessary to control inflation; but what do they do? Next to nothing. "The time is not yet; not now, ater. Wait and see". The whole trouble is ipparently they have a wildcat by the tail and they can't let go. Neither are they trying ,o do anything to clip its claws.
In a radio speech last Tuesday evening, April 17, the Minister of Finance said that it was not price controls we need, but purse control. I consider it an insult to the Canadian people, Mr. Speaker, when the controller of their pocketbook tells them that they cannot spend money, but the governmen! continues merrily on its spending spree. From the best information available it would appear that we are facing a further increase in the cost of living, even before the budget was presented to this house.
It is no exaggeration to say that the tax increases announced by the Minister of Finance will materially contribute further

to existing difficult conditions, particularly on the lower income groups. In short, Mr. Speaker, it is no exaggeration to say that the actions of this government, as expressed through the Minister of Finance and the taxation measures he has selected, will certainly help the workingman in Canada to keep his head below water. It can have no other result. Certainly manufacturers are not going to absorb any portion of that extra tax, and as prices increase, taxes pyramid and the consumer pays. This has been proven in the case of cigarettes; the extra tax on cigarettes was three cents a package out the price increase was four cents. Gasoline and diesel oil are other examples of increases due directly to this budget. It is not common to see a man in work clothes smoking cigars, but the tax on cigars was not increased; it was increased only on pipe and cigarette tobaccos, products which the man in working clothes uses.
The special excise tax of 15 per cent for instance on stoves, refrigerators, washing machines and radios will make it that much more difficult for young couples starting up housekeeping. The tax on liquor was not increased. Most harsh of all, however, was the 25 per cent increase in the general sales tax, which will affect every citizen of this country. On June 4, 1940, the Hon. J. L. Ralston referred to the sales tax in these words:
We realize that increases in indirect taxes disguise the burdens imposed by the war, but they are much more likely to distribute these burdens harshly and unfairly.
And Mr. Ilsley on April 29, 1941, said this:
An increase in the sales tax has, I think, been fairly generally expected. At least there are evidences of a good deal of buying in anticipation of such an increase. This tax, while comparatively easy of administration and collection, and extremely productive, has marked defects as a fiscal instrument. After extended consideration we decided on balance against any increase. In coming to this decision we were not forgetful of the problems of agriculture, which would have been intensified had the sales tax been raised.
Later, on October 12, 1945, Mr. Ilsley made this comment concerning sales tax:
I have been impressed also with the extent to which the sales tax is having a discouraging effect on the rapid and efficient modernization of our productive equipment.
Later in the same speech he said this:
Particularly we should remove those taxes which imposed far back in the production process, increased costs out of proportion to the contribut-tion which they make to the revenue.
Surely, after all that the supporters of this government have said about the general sales tax, the government will now reconsider its position on this announced increase. Added to the highest cost of living ever recorded in

this country, these new tax impositions will cause almost unbearable distress on pensioners, and others in low income groups- those least able to bear added costs. Agricultural producers will be faced with higher costs at a time when production in certain commodities is already approaching a dangerously low level.
It has been said by many that food is too dear, and is the cause of the high cost of living. While food materially contributes to the cost of living, certainly the producer is getting only a very small percentage of the consumer dollar. The following is a short quotation from the Ontario Fruit and Vegetable Growers Association booklet, stating:
The urban public, with little knowledge of the agricultural processes, is always prone to blame the farmer for rising food prices. For some unknown reason the farmer should be content with small profits or small wages so the so-called consumer may have cheap food.
It is, therefore, interesting to break down the consumer dollar in an effort to ascertain who gets the most of it. Figures available on canned fruits and vegetables afford an excellent illustration.
The canned fruit or vegetable content per ton of raw product used varies with the efficiency and the equipment of each processor. The final yield is also affected by seasonal factors which increase or decrease the turnout, that is to say, the average quality of the produce, the percentage of waste, the high or low water content, etc. By and large, however, the following figures are average for the canning industry as a whole, based on 1950 contract prices to producers and present consumer prices at Ottawa stores:
Canned tomatoes: 28 oz. tin; yield 50 doz. tins per one ton of tomatoes, or 3J lbs. of tomatoes raw weight per tin. Consumer pays 18 to 20 cents: producer gets 3-5 cents per tin.
Tomato juice:	20 oz. tin; yield 100 doz. tins per
one ton of tomatoes, or 13 lbs. of tomatoes raw weight per tin. Consumer pays 11 to 12J cents; producer gets 1-8 cents per tin.
Sweet corn:	20 oz. tin or 14 oz. vacuum packed
tin (both contain approximately the same amount of product); yield 50 doz. tins per one ton of sweet corn, or 3J lbs. of sweet corn raw weight per tin. Consumer pays 141 to 18 cents. The producer gets 31 cents per tin.
Green peas: 20 oz. tin; yield 192 doz. tins per one ton of green peas, or l lbs. of green peas raw weight per tin. Consumer pays 15 to 21 cents; the producer gets 3-2 cents.
Green beans:	20 oz. tin; yields 200 doz. tins per
one ton of beans, or | lbs. of beans raw weight per tin. Consumer pays 14 to 27 cents; the producer gets 3-3 cents per tin.
Peaches:	20 oz. tin syrup pack-yield 1600 tins
per one ton of peaches, or 11 lbs. of peaches raw weight per tin. Consumer pays 25 to 28. Producer gets 5 7 cents per tin.
Variations in consumer prices depend on the grade-fancy, choice or standard. Further
The Budget-Mr. Charlton proof of this is found in figures taken from the United States Department of Agriculture, bureau of agricultural economics, appearing in the London Free Press of April 10, as follows:
Like this for example. Using last December's prices, if the farmer gave away the wool in a $50 suit of men's clothing the suit would still sell for $40.50. If he'd give away the wheat in a 16 cent loaf of bread the loaf would still cost the consumer 13-4 cents. If the farmer gave away the beans in a 16 cent can of pork and beans, the can would still cost you 14 cents at the grocery store. For cigarette smokers-
And these are American prices.
-if the tobacco grower gave away the tobacco in a 20-cent packet of cigarettes, the girl behind the counter would still ask you for 17 cents to pay for that purchase.
Net farm income has dropped appreciably in the last year. Nearly 100,000 farmers and farm workers have left farms over the last three years. Why? Because of the uncertainty of farm income. This government, through the Minister of Agriculture (Mr. Gardiner), has pernitted this condition to continue by failing to give leadership to agriculture. The penny-pinching policy of the Department of Agriculture, and failure to make adequate use of the Agricultural Prices Support Act, have cost the consumer of this country millions of dollars. All producers may not agree that the prices of food commodities may go too high. Butter did, because of the failure of the government to place the floor price high enough. Therefore production falls and prices increase.
The value of floor prices, if used wisely, is the steadying effect they have on production. It is a disadvantage to both producer and consumer to allow wide fluctuation in production, thence a comparable upward or downward movement of the consumer prices, depending on supply. Farmers cannot determine the year's output as can a factory owing to the dependence of the industry on the elements of nature. If the law of supply and demand were allowed to operate without some direction by producer organizations in co-operation with the government, it would inevitably follow that there would be low prices when supply exceeds demand, and high prices when the producer has little to sell. Price support could, in some degree, protect the producer when nature has been so kind. When production later proves insufficient to meet the demand, the reserve held in price support should then be released on the market. In this manner both producers and consumers gained something from the principle of price support. To support this statement I would like to quote from an

The Budget-Mr. Charlton article appearing in the Ottawa Journal of March 2, 1951:
Claims Price Floors for Producers Protected Consumers.
Without government price support, Canadians would be paying $1 a pound for butter and 80 or 90 cents a dozen for eggs, H. H. Hannam said today.
Support programs "have been of definite advantage to the consumer as well as the producer", the Canadian Federation of Agriculture president said in a speech before the annual meeting of the Ontario concentrated milk producers. Though price support programs for farm products have cost the government "a comparatively small amount", they have been of "definite advantage to the consumer as well as the producer." "If we had had no price support for butter and eggs, I am confident", said Mr. Hannam, "that the price by now might have been 80 or 90 cents a dozen for eggs and nearly a dollar for butter." Production would have dropped and products would have become scarce and prices of butter and eggs "would have been driven to the dollar mark."
The example of the last few months in the butter market should be sufficient proof that the floor price is too low. Cream producers of Canada through the dairy farmers of Canada and the Canadian Federation of Agriculture are of the opinion that it would require a floor price of 62 cents for butter to assure a reasonable supply for next winter and thus alleviate a repetition of the shortage and high consumer price of this year.
The whole dairy industry of this country is in a dangerous condition at the present time as explained so well by my colleague, the hon. member for Lanark (Mr. Blair), earlier in this debate. Government policy has discouraged production. Government bulk trading contracts have not proved to be the Utopia the Minister of Agriculture (Mr. Gardiner) promised of them. I would like at this time to quote an editorial from .the Ottawa Journal of March 15, 1951:
Weakness of State Bulk Trading
While the fixing of responsibility for the sorry ending of that Anglo-Canadian wheat agreement


Mr. Deputy Speaker:: Order. The hon. member cannot refer to the Anglo-Canadian contract.


John Alpheus Charlton: This continues:
-what is the basic lesson to be drawn from it? Overwhelmingly the folly and danger of state bulk trading; of trading by diplomacy.
When there is only one buyer and one seller a premium is from the first placed on sheer obstinacy. And when politicians have once taken up a bargaining position and clothed it in what the London Economist calls "sovereign majesty," it is far harder for them than for a multitude of private traders to recognize a mistake and lose face. "Prestige" becomes important.
Further; When a group of producers, whether wheat farmers-
(Mr. Charlton.]


Mr. Deputy Speaker:: There should not be any reference to the contract, and I cannot allow this discussion. ,


Mr. Green:: On that point of order, the hon. member for Brant-Wentworth (Mr. Charlton) is discussing state trading. Surely Your Honour is not ruling that there cannot be a discussion of state trading. I can understand how you might rule that there should not be a discussion with regard to the $65 million payment, but that is not what the hon. member is discussing. He is discussing the evils of state trading, and I submit he is quite in order.


Mr. Deputy Speaker:: As long as he is discussing state trading it is in order, but he should not refer to the British contract.


John Alpheus Charlton: The editorial continues:
Further: When a group of producers, whether wheat farmers, dairy farmers or manufacturers, ask or permit a government to do their trading for them, they put themselves into politics, mix politics with business, become beholden to the politicians who are doing their trading for them.
The wheat farmers of western Canada asked the government to sell their wheat for them, to negotiate its price.


Mr. Deputy Speaker:: Order. I cannot allow a discussion of the wheat agreement.


John Alpheus Charlton: Mr. Speaker, I am not discussing the wheat agreement at all; I am simply discussing bulk trading. The editorial continues:
It was an unsound method of selling wheat, with the result from the outset inevitable. As the Winnipeg Free Press puts it:
"Bulk sale contracts are unsound contracts. No buyer will enter into such contracts unless the price is lower than the market. That was true of the-"
I shall have to skip that.
"This is the lesson that the loss will not have been in vain if the producers learn that the only guarantee of selling their wheat for what it is worth is the market."
Since these bulk contracts did not prove as Utopian as the Minister of Agriculture had hoped, he now, in his characteristic fashion, tries to find a scapegoat. While addressing the Canadian Federation of Agriculture convention at Calgary, which I had the privilege of attending, the minister's whole speech was one of defence, and I quote from the Calgary Herald of January 23: British Pacts Could Be "Ridiculous"
J. G. Gardiner Outlines Canadian Trade Policy
"Every Liberal in the world believes that if we can maintain peace these agreements (British trade agreements with other countries) will very soon prove themselves to be the most ridiculous policies for promoting trade ever put into operation," Rt. Hon. James G. Gardiner, federal minister of agriculture told the Canadian Federation of Agriculture convention in the Palliser hotel this afternoon.

Defending government policy the minister referred to the history of commonwealth trading agreements to show that his government had opposed the idea of quota trading in 1936, but the Canadian government had already been committed by the Conservative government of Rt. Hon. R. B. Bennett.
His government had argued that such a plan was not suitable for a country such as Canada where agriculture could be expanded.
Until the second great war came the present government was not responsible for the plan but carried on "because no other plan was available." Canada had demonstrated that it could deliver greater quantities of food than it had been allowed under the British contracts but after the war other contracts with other countries were acknowledged.
The agricultural policies of the present federal government were actually those advocated by the government of Lord Bennett of Calgary when the latter was prime minister, Mr. Gardiner said in an interview.
In this all-out endeavour to extricate himself and his government the minister certainly had his wires crossed, as explained so well in the Winnipeg Free Press of February 10, a paper which by no stretch of the imagination could be said to be biased against the government. I quote:
Mr. Gardiner's Views
Speaking in this city a few days ago at the annual banquet of the Manitoba Liberal-Progressive Association. Mr. Gardiner, referring to bulk contracts remarked that he agrees with the views of the Free Press. "My friends of the Winnipeg Free Press" he said, "don't like bulk contracts. Neither do I. I have only one objection to the Winnipeg Free Press articles and that is they try to make you believe that I think differently to them on this subject." The only difference, he went on, was that he knew the history of this development and tried to place the blame where it belongs.
Mr. Gardiner's speech at Calgary on January 21 (the text of which is not to hand) explains his point of view in much more detail than his Winnipeg address. His argument is that the author of bulk trading, that is, government to government, or state buying and selling, was none other than Right Hon. R. B. Bennett. The Conservative party is the villain. The scene and occasion of the crime was the empire economic conference of 1932 where trade agreements with the United Kingdom were entered into by Canada, Australia, New Zealand and other members of the commonwealth.
Mr. Gardiner's argument is that he has been compelled, against his judgment, to engage in bulk trading because of two circumstances:
1.	The empire trade agreements of 19 years ago and,
2.	The British government will not trade in any other way.
On these grounds, Mr. Gardiner claims, he is compelled to do violence to the principles of trade which he regards as sound. There is, of course, no validity in Mr. Gardiner's first point. No bulk trading contracts were authorized by the empire treaties of 1932 and none were entered into by the Bennett government. Mr. Gardiner is confusing bulk contracts with quotas. What was done in 1932 was to adopt the principle of quotas-that is of restrictions upon total sales in the British market. Quotas and bulk contracts are as different as salt from sugar. Quotas are an extreme form of protection but, apart from this, do not interfere with private trade.
The Budget-Mr. Charlton
On the second count, Mr. Gardiner might reconsider his statement that bulk contracts are the only way in which the United Kingdom government will trade. Actually the United Kingdom has been buying all sorts of commodities other than wheat in large quantities. It has been buying lumber, copper, zinc, and many other items and in none of them has a bulk sale contract been regarded as essential. In all these purchases the British government has paid the market price-a point of great interest to Mr. Gardiner-thereby avoiding disagreeable claims by producers for compensation, such as are now being advanced with regard to the U.K.-Canada wheat agreement.
Producers were forced to take less than world prices by the government with the promise of assured future markets. Where are they? The cheese producers of Canada lost millions of dollars through government contracts. As a result of this, cheese production has been reduced to the lowest point in fifty years. Although cheese production is lower this year than last, we have never in Canada consumed all the cheese produced. What does the government propose to do with the surplus, however small it may be?
Mr. Speaker, I would like to make one suggestion to the Minister of Agriculture, and through him to the government, that I think would go far to (a) increase markets for the products of agriculture; (b) increase the quality of products now produced and thereby enhance the competitive position of Canadian agricultural products; (c) reduce production costs and bring to the original or primary producers a greater percentage of the ultimate consumer price.
I refer specifically to greater participation, made possible by government assistance and direction, in the field of chemurgic research. I read with interest what is being done in other countries and am alarmed at the slowness of Canada to participate in this work which has already proven so beneficial elsewhere. The Minister of Agriculture, in a speech in this house not long ago, referred to what had been done in the field of utilization of the soy bean in our economy. This is but one example of the tremendous advantages which can accrue to agriculture and the economy of this country by research in the fuller utilization of the products of the soil.
I would like at this point to draw to the attention of this house the possibilities in other fields, and I quote from the report of the National Chemurgic Council of America:
Filberts Flavour Cheese
American cheese of superior flavour can be produced with the aid of chemical agents obtained from filbert nuts.
Aside from its importance to the nation's cheese industry, this development is particularly ,good news for Oregon, where filberts are already a surplus crop and constantly increasing yields are promised by many young filbert orchards.

The Budget-Mr. Charlton
The filbert chemicals used in treating cheese are known as proteolytic enzymes, which means they are substances that help to digest proteins-in this case, milk proteins. They were tested for their effect on cheese flavour because of the present trend toward manufacture of American or Cheddar cheese from pasteurized milk, which produces milk cheese with less flavour and slightly different characteristics from those found in raw milk cheese.
Samples of Cheddar were taken out of a commercial cheese vat after milling and salt was added. A measured volume of the filbert extract was added to each experimental sample and a similar volume of water to the control samples.
The regular processing and storage procedures were then carried out, all the samples being checked at regular monthly intervals.
At the end of four months, expert cheese tasters pronounced the cheese made with the filbert extracts to have much better flavour than all the other samples, including the controls. It was better aged. The control samples had a mild clean flavour which did not compare with the superior flavour of the treated samples. In addition to this improvement in flavour, the ripening time was substantially shortened, which is of economic importance because of the expense for storage rooms. It should be emphasized that no filbert nut flavour was transferred to the treated cheese by the filbert extracts.
Proteolytic enzymes have been isolated from many plants. The presence of a protein-digesting substance in the leaves and green fruit of the papaya tree (carica papaya) has long been known. The existence of a similar meat-digesting enzyme in the juice of the pineapple was first noted in 1891 by a Venezuelan scientist named Marcano. Figs, milkweed, lima beans, and the kernels of wheat also have been found to contain such enzymes. The work on filberts was prompted by a search for new uses for Oregon's surplus nuts.
As I stated before, the farmers are discouraged. With mounting costs and continued scarcity of farm labour many farmers are changing their programs to conform to the shorter work week in industry. This, however, is impossible for the dairy farmer, hence many are quitting that branch of the industry. The Canadian Weekly Newspapers Association has recognized the agricultural problem, and I quote from an article appearing in the Globe and Mail of March 9, 1951:
Rural Canada Hit Hard by Wage-Raising Trend, Weekly Papers Warn
Ottawa, March 9-A dangerous unbalance exists between the rural and urban economies of Canada, Prime Minister St. Laurent and members of his cabinet were warned today in a brief presented by the Canadian Weekly Newspapers Association. The brief, presented by W. E. McCartney, managing director, pointed specifically to the recent trend toward raising wages, curbing productive hours of work, and said that this placed an unfair economic burden on rural Canada.
The consequence of this trend is that milk production is down half a billion pounds in the last three years. The cow population has been reduced by almost a half million since 1945, while our human population has increased by one and three-quarter million in the same period. If this trend is allowed

to continue, and certainly there has been no apparent move by the government to stop it, then production will continue to decline. Either the dairy industry must be placed on a profitable basis or supplies will be short with resultant high prices. Consumers are beginning to tell their children now that the beef steer, not the cow, is jumping over the moon. This is not a healthy situation for either the producer or the consumer, and I am sure the dairy farmers of Canada do not want extremely high prices. On the other hand if the government does not take some remedial action the dairy cow could quite conceivably be replaced by products made from cheap imported vegetable oils. A low price for a farm product is no advantage to consumers. They have to make up for it later on when supply drops off. The best example of this fact was the terrific increase in egg prices last year, following the refusal for two months by this government to place a floor price under eggs when the bottom dropped out in December 1949, and hundreds of flocks were sold off.
I should like to quote from a Canadian Press article appearing in the Globe and Mail of March 1, 1951:
Food Producers Merit Fair Prices, Gardiner Holds
Ste. Anne de Bellevue, Quebec, Feb. 27-Canadian Press-Agriculture Minister Gardiner said today that Canadian food producers have two primary objectives-to produce enough food for our own people and to sell at a sufficiently high price to encourage them to keep on producing.
New Zealand butter, which Mr. Gardiner said the government did not want to see brought into Canada, was laid down at Halifax at a cost of 40-4 cents a pound. The floor price in Canada was 53 cents. Canadian farmers could not compete with New Zealand butter. The butter dealers were selling the imported butter at 56] cents a pound.
"The market price in this country must be comparatively high," said the minister.
The Minister of Agriculture (Mr. Gardiner) stated that the four and a half million pounds of New Zealand butter was laid down at Halifax for 40 [DOT] 4 cents per pound and sold for 56J, resulting in a profit of at least a million dollars which the government should have had in view of the maintained floor price of 53 cents. The government in effect subsidized a good share of that very juicy profit. In cases where a floor price is being maintained on any product and a short position is encountered, then the government itself, under such conditions, should import a sufli-cient quantity to satisfy the conditions, should import a sufficient quantity to satisfy the domestic demand. What did this government do? They closed the door on January 24 by order in council, placing butter imports under government control; but somebody had his foot in the door, because on January 27 it was

opened again by the cancellation of the order in council. No reason was given or explanation offered; just cancelled.
In the event of a war, the food situation in Canada could be serious. In the case of most field crops, dependent on the weather of course, production could be stepped up in a year with sufficient help. The same would be true of poultry and hogs.
Dairy products, beef and sheep, however, would take nearly three years, even with the most stringent controls. I would urge the government, therefore, to make the necessary use of the Agricultural Prices Support Act. Incorporate within the act some formula upon which to base the floor price, thereby relieving the constant fear in the minds of the producers of our nation's food, and assure the production of at least our own domestic requirements.


Samuel Rosborough Balcom: Mr. Speaker, after such a friendly reception perhaps I should, in reciprocation, make my speech short so the members can get away before six o'clock. In my brief observation of events here. Mr. Speaker. I have noticed a disposition to invoke the blessing of the deity, and to call on powers other than those conferred by membership in this house. I may say that at this point I am in entire sympathy and accord with the feelings which prompt such utterances. Someone wiser than I once said that there is nothing new under the sun. I am sure, Mr. Speaker, that thought must have occurred many times in the minds of hon. members as another new member launched forth on his maiden speech. This is particularly true in my case because Halifax constituency has been so ably represented by my predecessor, the Hon. Senator Isnor, and by the senior member for Halifax (Mr. Dickey), so I can add very little to what has been said before.
In the light of the present fast moving events it might be well to remind you that Halifax city, which is the centre of our constituency, was founded 202 years ago as a military outpost. No doubt there are some people who are unkind enough to suggest it is still an outpost of Toronto, perhaps, or Saint John. But had Halifax, the warden of the honour of the north, not been pioneered first, even the constituency of Springfield might still be a wilderness.
The riding is large in size, and has a population of roughly 150,000. Most, of the people live along the coast line, for the sea is very important to their livelihood. It is a .
The Budget-Mr. Balcom heavily forested area which supports a substantial lumber industry, and there is some farm land. Over 75 per cent of the population is concentrated in the Halifax-Dartmouth area bordering on the magnificent harbour which is the heart of the community. Despite the growth in industry, commerce, business and educational services, Halifax is never far removed psychologically from the feature that prompted its origin, namely the strategic value of its harbour. This port is, unfortunately, apt to be forgotten by the rest of Canada between wars, not intentionally but because we are far away from the more populous areas.
I need not remind you of its part in world wars I and II, and even as far back as the Riel rebellion and the South African war in 1899-1902, when Halifax sent a regiment of its own. I hardly need to assure you that it is ready to play its part again in strengthening our defences against aggression or, if the worst should come, active participation in the war for our way of life.
At this point, perhaps I should mention a misunderstanding that arose in connection with a statement attributed to our minister of health and welfare, the Hon. Harold Connolly. When speaking in Florida, he was misquoted by the newspapers.


Alfred Johnson Brooks: That is always the case when they say the wrong thing.


Samuel Rosborough Balcom: He gave a denial to the
Halifax Chronicle-Herald of April 21, stating that he had made no mention of union between Canada and the United States. The article reads in part:
Anything might happen at any time, I said. Who could tell? As to the "affinity" matter, we were talking on the socialist government in Britain as compared with the democratic government in Canada. On this point I expressed the view that socialism would never take over the government in Canada and that in this connection Canada and the United States had much in common, both peoples preferring to live under a system of democracy.
I am sure most members in this house will agree with what Mr. Connolly has said in his denial, including the member for Royal (Mr. Brooks).


Alfred Johnson Brooks: Not in Florida, but in Halifax.


Samuel Rosborough Balcom: Coming back to the strategic importance of the riding, the heavy concentration of naval and military establishments there creates serious problems in civic government. Tax-exempt property representing 50 per cent of our total assessment has to be serviced and protected as well as civilian establishments. The existence of such in any

The Budget-Mr. Balcom community is a problem. Add to that a personnel establishment that increases and contracts from time to time, and you have a heavy burden on city services.
The federal government has recognized its responsibilities in this regard by some payments already made in lieu of taxation of crown property. I note with satisfaction that measures will be considered during this session respecting federal grants to municipalities. The special position of Halifax and Dartmouth must be recognized and an equitable arrangement made regarding these obligations.
The burden of the speech from the throne and indeed most of the proceedings of the house to date have left little room for any but the most sober appraisal of our responsibilities here. The forthright account of events in the international field given by the Secretary of State for External Affairs (Mr. Pearson) has shown the gravity of the situation confronting us. The part Canada will play in the drive for collective defence has been outlined. The magnitude of the commitments has been well described as "staggering".
'The means of financing these commitments are rather painful and there has been heated debate on some aspects of government policy to that end. Nevertheless, I believe that the reaction to the budget bears out what the Minister of Finance (Mr. Abbott) said in presenting it, as reported at page 1798 of Hansard:
. . . there are no great issues of principle dividing us ... on the major questions of policy underlying my proposals we are all fundamentally agreed.
It is apparent that for many years we shall have to turn our energy from the constructive pursuits which we should like to follow. Our productive capacity must be devoted to an increasing degree to defence instead of primarily to improving the standard of living of our people. The need for physical defence is paramount but in our haste to this end we must be careful not to neglect other values fundamental to our well-being.
We have been informed that we may expect the report of the royal commission on national development in the arts, letters and sciences during this session. In Canada we have some peculiar problems in the field of culture and education, and the findings of this commission are awaited with much interest. The field is of the utmost concern; for, apart from its intrinsic importance, the heaviest strain of the next few years will fall upon our mental and spiritual resources. It is well known that the upheaval of war subjects the average individual to the lure of the "eat, drink and be merry" philosophy. It is equally

so of a nation. In our preoccupation with defence let us not neglect the values which make our sacrifices worth while.
There may be some thought during this difficult period in the world's history that we should concentrate all our energies in holding back the flood of aggression. That is all very fine in itself, but it is not my view. The world conflict cannot be solved by setting aside the very elements that have made our civilization strong. Democracies must never stand still.
But even under the threat of war we must go forward with every plan to improve our way of life. For this reason I commend the undertaking of the government to provide pensions for those 70 and over without the means test; pensions for the needy between 65-70; and possibly aids to the handicapped. Of particular importance are the grants to our universities and I would stress those grants to our schools of social work which are contributing so much to the welfare of our people. I have hope that ample allowance has been made for these schools of social work in the estimates of the Department of National Health and Welfare. In terms of our total expenditures on welfare payments to individuals, an investment in training facilities is a moderate cost to ensure that these payments are well spent. The minister has always been generous in the provision of such assistance, and he is well aware of their contribution and of the desirability, or even the need, to have them function independently of the government.
I am sorry, Mr. Speaker, that more people were unable to see the picture which was shown the other night in this building, when the work of the social worker was screened. The scenes were in British Columbia, but we might say that the picture that was shown there would be typical of all the provinces. British Columbia people should be proud that their province was chosen for the scenes.
Our Canadian pattern is made strong by all thp complex forces involved in it. The active part played in our social life by voluntary groups cannot be overestimated, and we should be very thankful that these voluntary groups are so eager to work.
I would suggest to you, Mr. Speaker, that the world conflict today is between truth and confusion. We must not fail our conviction that we are on the right road to progress, that the ordinary men and women of this earth can find, in company with us, the right way to the future. We should maintain and strengthen all voluntary activities in Canada that serve to enrich Canadian life. Communism with all its vain promises

and all its sordid performances cannot be answered by words alone.
Those of us fortunate enough to live in Nova Scotia want to say that we are ready at all times to stand with the rest of Canada and bear our share in times of stress. The right hand of the Dominion of Canada that reaches far out into the Atlantic ocean, we have borne the brunt of wars since 1605, in the days of de Monts and Champlain, and in Halifax since the arrival of Lord Cornwallis in 1749. But the fact of our being on the fringe of such a far-flung country and the fact of our being connected with the rest of Canada by a railway, the location of which was determined primarily by strategic considerations, have created some difficulties. Various measures have been implemented to mitigate the economic handicaps resulting from transportation costs, but many problems remain. The royal commission on transportation has taken cognizance of these matters peculiar to the various regions in Canada. We in the maritimes are particularly gratified that the report recognizes the validity of our objections to horizontal freight rate increases.
On another recommendation of this same report, there is not so general approval. I refer to the formation of a local advisory committee for our Halifax harbours board. Had we had such an advisory committee operating at this time, the unfortunate accidents which have occurred recently might have been avoided. We are still convinced that remote control is not in the best interests of our national harbours.
Normally, Halifax is a winter port, partially used during the winter, only slightly used during the summer when the St. Lawrence river is open, but totally used in an all-out war. Halifax harbour has untold advantages over any other Atlantic port-with commiseration to Saint John-as we have very little tide, no great windstorms; suitable docks, with more under construction; excellent anchorage; and "fair" railway services. I say "fair" because I consider that the Canadian Pacific Railway should be running over its own rails into Halifax or at least have running rights over the C.N.R. In no way is this a reflection on the excellent service given by the Canadian National Railways but the lack of competition is hurting not only Halifax but all of Nova Scotia.
The hon. member for St. John's West (Mr. Browne) in the house last week drew attention to the rail and water services between the mainland and Newfoundland, and he stated that he had suggested to the president of the Canadian National Railways the desirability of operating steamships between
The Budget-Mr. Balcom Halifax or Montreal and St. John's. Since almost 40 per cent of the people of Newfoundland are in the Avalon peninsula, a great deal of the traffic to the island should be brought to St. John's by water from Halifax.
When Newfoundland entered confederation, it was arranged that the Canadian National Railways regard the boat haul from Sydney to Port aux Basques as a railway route. Although the merchandise has to be transshipped several times, rates are set on the basis that it is an all-rail route. This has meant the diversion of traffic which would logically go to St. John's via Halifax.
Merchandise, particularly heavy equipment, furniture, and the like, when it is routed in such a way that it has to be unloaded and reloaded several times, really calls for export packaging which is very costly. Freight for St. John's landed at Port aux Basques has to be carried 550 miles across the island over a railroad already busy serving its own area.
It is reported that the loss to the Canadian National Railways on Newfoundland operations during 1950 amounted to $3 million, exclusive of a subsidy of $1,250,000 on the coastal steamship operations. I would respectfully suggest that if the freight intended for St. John's and the Avalon peninsula were directed through Halifax, this deficit would be greatly reduced. This would not interfere with the freight which would, by reason of its destination, naturally be shipped through North Sydney. The fastest, the best, and the route that calls for the least handling of freight should be the one adopted and in respect to goods going to the Avalon peninsula, Halifax is the logical shipping point. I appreciate the efforts of the hon. member for St. John's West in advocating some such arrangements.
As you know, Halifax is not only a shipping port, but is also the home port of a considerable fishing fleet which sails to the nearby fishing banks, most prolific and least depleted in the world. The port has, too, a considerable stake in the inshore fisheries. A large proportion of the rural population who live along the coast line are dependent on the fishing industry for a whole or a part at least, of their livelihood. I am, therefore, keenly interested in anything that affects that group of people.
The announcement in the budget regarding certain tariff changes affecting fishermen's supplies will be good news to our constituents. The free entry of diesel engines used in commercial fishing operations and widening of the provision covering nets


Mr. J. H. Ferguson (Simcoe North):: Mr. Speaker, I rise to say a few words in the budget debate. The hon. member who immediately preceded me voiced his opinion of the manner in which the government has been carrying on the affairs of the people. I am sure everything he said met with the unanimous approval of one hundred per cent of government front and back benches.
The hon. member made the further statement that Sir John A. Macdonald had said that a government with a large majority was not always the best thing for a country. Sir John A. Macdonald made very few mistakes, and in that assertion he was absolutely right.


Mr. Riley:: You are jealous now.


Julian Harcourt Ferguson: The people will do all that is necessary when the next election comes. You will know that then.
Then the hon. member referred to a weak opposition. Let me assure the government there is no weak opposition in this house opposite them at the present time. The duty of an opposition is to criticize -


Daniel Aloysius Riley: Is there any opposition?


Julian Harcourt Ferguson: -and the government will be criticized until such time as the people voice their opinion at the next election. At that time they will be guided by the criticism of the present opposition, so that the majority of the government will be cut to nothing- neither minus nor plus.
The Minister of Finance (Mr. Abbott) has introduced a budget that received applause from members supporting the government. I consider the minister's budget as a most deceitful one, so far as the people are concerned.


Mr. Sinnott:: Why'
2292	HOUSE OF
The Budget-Mr. Ferguson


Julian Harcourt Ferguson: You probably would not know if I told you anything about hidden taxes, but the majority of people in Canada are learning about hidden taxes. I do not know whether you smoke or drink, but if you do either you are paying the hidden taxes you don't know anything about.


An hon. Member:: Louder.


Julian Harcourt Ferguson: Every package of cigarettes the smoker buys bears a stamp on which it is stated that the package contains twenty cigarettes.


An hon. Member:: Why don't you roll your own?


Julian Harcourt Ferguson: I believe the government would be doing the right and courageous thing it if were to indicate on the cigarette package that there is a tax of 23 cents. It should say, "You are paying 23 cents tax."


Mr. Fraser:: More than that.


Julian Harcourt Ferguson: What could be more deceitful, when the government puts on a two or three-cent stamp (the value of the tax but not on cigarettes?


Daniel Aloysius Riley: Will you put that in your platform?


Julian Harcourt Ferguson: When I am prime minister I won't attempt to fleece the taxpayer by heading a government that builds a building for myself and my successors, at a cost of half a million or a million dollars. Let me assure you of that.


Daniel Aloysius Riley: If I could vote for you, I would.


Julian Harcourt Ferguson: I am sure you would. Now, there are a great many Liberals who vote for me in my own riding, on every occasion.


An hon. Member:: There are always backsliders.


Julian Harcourt Ferguson: The reason I am speaking is that I believe hon. members on the government side should not be just rubber stamps. It is nearly time they voted according to their conscience rather than by rule of thumb.


Daniel Aloysius Riley: Or rule of law?


Julian Harcourt Ferguson: What have we heard from the government with regard to old age pensions? I am not talking about pensions for the man who says that because he has reached the age of seventy, eighty or ninety years he is entitled to a pension. I am talking about the man or woman who cannot exist without a pension or a subsidy from the taxpayers. I am not talking about the man who is willing and able to work; I refer to those needy people of seventy years and over. What about the $40 on which they are barely existing? I venture to say some of them are not
[Mr. Sinnott.l

existing at all; they still have to look to charitable institutions and neighbours in order to exist-and that in this land of plenty!
What about the crippled people in Canada? We have been sitting here since the latter part of January, and I would ask what the government has done to help bedridden people. There are bedridden people who have been crippled for life who cannot provide for themselves. That is a blotch on the reputation of this government, yet we have the unanimous desk-thumping of the Liberal members. What about our shortages?
Where is the vision of the people who built this country? Can similar vision be found among the ministers of this government? What about the steel situation? We are selling now steel by the ton to the United States for $5 and buying it back at $100 per ton finished. What about the nail situation? Every time nails are mentioned there are laughs from the members of the Liberal party. But it is no laughing matter for a man who wants a roof over his head for himself, his wife and children. What about the cement situation? Has this government gone to the manufacturers of steel and told them that if they do not expand their plants, the government will?
I am a free enterpriser from the word go, but if I was a member of any government which did not lay down the law to the steel companies of Canada, which had not taken this action five, six or seven years ago, I would soon quit that party.


An hon. Member:: Go back to cement.


Julian Harcourt Ferguson: This applies to cement as well. Keep the government out of business as long as you possibly can, but when you cannot avoid it get into business. First of all, any government represents the people. If private enterprise cannot cope with the situation, the government has the facilities to do so. I know that members of the Liberal party agree with my assertions. They know it is all too true.
In this modern day and age you cannot ask people to go into a home in the city or country without a hot water boiler to heat water for the children, for washing, for dishes, for clothes and so on. What do we find? When after great struggles a man gets a roof on, gets the doors on, probably gets a furnace in, he is faced with the fact that there are no hot water boilers available in this great banner province of Ontario in the Dominion of Canada. There are useless and unnecessary shortages brought about by another department which has shown a complete lack of foresight.

There is another department, the department of immigration. The minister is aiming for 150,000 people to be brought to Canada this year from the British empire and other foreign countries this side of the iron curtain. That includes men, women and children. If he gets 150,000, at least 75,000 will be children not able to work. The great majority of these people will not be able to speak our language and yet they are supposed to take up the slack created by those who have gone into the active forces by necessity, or who have gone to the United States to the extent of 50,000. Through the great efforts of this immigration department, and provided no more are needed for the armed forces, there will probably be an increase in the labour situation of over 12,000 people. If that is something to be proud of, I do not know what is. I say that that indicates the disgraceful lack of vision, a lack of perseverance, a lack of planning-


An hon. Member:: A lack of intelligence.


Julian Harcourt Ferguson: A lack of intelligence, no doubt about it. This country should have at least 150,000 men and women who have reached the age where they are able to work and can participate in production for their livelihood in the Dominion of Canada.
We have in this country shipyards that are capable of building ships equal to any in the world. I should like to see some document containing a plan for the construction of ships in order to keep our shipyards busy from coast to coast. Every shipyard worker has a hand-to-mouth existence today. We sold ships to foreign countries at scandalously low prices; we could not get rid of them fast enough, and today we find ourselves with tremendous export markets, owing to the dire necessity of our customers across the sea, but foreign ships have to do most of the transporting.
With regard to the construction of naval vessels, all there is is a possibility or a hope. That is pretty weak stuff for a shipyard worker to look forward to in an effort to provide for his family in a great land like Canada. There has been absolutely no vision on behalf of this government.


An hon. Member:: Nothing but chaos.


An hon. Member:: Correct.


Julian Harcourt Ferguson: If there is no chaos in your opinion it is certainly not the fault of this government. It is the result of the perseverance of Canadian people who are of the right kind; it is certainly not through any guidance given by this government that there is not chaos.
The dairy farmer in my riding and all over Canada has been wondering into what he
The Budget-Mr. Ferguson should sink his teeth in order to make a livelihood, in order to pay off the mortgage on his farm and keep pace with prices in Canada. There is a statistical department of this government which threatens him with a fine of $100 if he does not fill out all the silly forms supplied by that department.


An hon. Member:: Did they threaten you?


Julian Harcourt Ferguson: Yes, they threatened me with a fine of $100.


An hon. Member:: Shame.


Julian Harcourt Ferguson: The mounted police
threatened me because I drew a cartoon showing how lackadaisical this government was. Every farmer will tell you that he does not know whether to grow wheat, produce hogs, poultry, eggs or anything else. It is a hit and miss problem, irrespective of the fact that the government has all these statistical records and knows absolutely where it is headed with regard to the need for all these commodities. But they have given absolutely no guidance, yet members of the Liberal party stand around with smirks on their faces. Let them go back to their constituencies.


An hon. Member:: We are listening to you.


An hon. Member:: How can we go?


Julian Harcourt Ferguson: I am convinced you will be going after I am through.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at eight o'clock.
Julian Harcourt Ferguson: In resuming my remarks, Mr. Speaker, I shall be very brief; but in dealing with the last item I wish to discuss I think I will be able to point out clearly, if not to the members of the government at least to the people of Canada, that by its handling of this one matter the government has proven beyond peradventure that it has utter disregard for the value of the money that comes from the taxpayers, and that it is not carrying out the trust the citizens of Canada .placed in it when the government was elected to power in 1949.
Everyone in Canada, irrespective of party, is in favour of a home for the Prime Minister. Everyone wants a home that will be in keeping with the position. The duties of the Prime Minister and those of the Governor General are entirely different; there is no doubt about that. The Prime Minister is one of the busiest men in Canada; but at no time has the Prime Minister of this or any other country been called upon to perform the

The Budget-Mr. Ferguson duties or functions of the Governor General. Yet we find the taxpayers of Canada, having no more to say about it than simply voting this government into power, called upon to pay a bill which I estimate will amount to something like $800,000. When it is completed I think it will be found that I am not far wrong; probably I will be $100,000 short.
When this residence was conceived, considered and finally begun by this government, apparently no definite over-all price was fixed, taking into consideration the high costs of construction, furnishings, maintenance and so on. I contend that if the government could be so far out in interpreting the feelings of the Canadian people with respect to the edifice in the course of construction, to be known as the Prime Minister's home, they might well be out and are out on almost everything they have tackled on behalf of the people of this country. Most of us, through curiosity or of necessity, have passed the building which is to be occupied by the present Prime Minister (Mr. St. Laurent) and those following him. None of us is so childish as not to know something about the cost of construction. That building today represents an expenditure of more than half a million dollars. We know something of what might be expected from the expenditure of a quarter of a million dollars on a residence. If the completed building is in keeping with the amount already spent it is going to cost the taxpayers tremendous amounts to keep it in repair and to maintain the furnishings. We talk about cutting expenditures in this country.


Edmund Davie Fulton: Who does? Not the government.


Julian Harcourt Ferguson: The government is constantly talking about cutting expenditures, but makes no effort to do so. I do not like to bring up this matter of the Prime Minister's home, but it is something which is of interest to the whole country. It is something of which Canadians should be proud, but one can hardly be proud of anything so costly that it means our pocketbooks will be pinched in order to pay for it. Every member of this house must realize that there is not a more blatant, brazen case of flagrant squandering of public funds than has occurred in connection with this building.
I do not want to be mean about it. Never let it be said that Julian Ferguson did not want a home for the Prime Minister in keeping with the dignity of that position, but there is a great difference between a home in keeping with that position and a home the taxpayers cannot afford, and that is what we have today. Compare it with 10

Downing street, which has housed some of the greatest men the world has ever known, where in the past some of the greatest national ideas and ideals have been conceived, which has been occupied by some of the greatest brains the British empire has ever seen. I have never heard that building criticized as too humble or too cheap for the Prime Minister of England. But this government wanted to keep up with the Joneses to the south, where they have a population of 155 million-


Some hon. Members:: Don't get excited.


Julian Harcourt Ferguson: I get so mad on this subject. It is too bad the men in charge of that project did not get a little excited, but they took things too easy. They came along and paid $150,000 for an old building which was almost falling down; another $200,000 to start the renovation; another $150,000 to furnish it, and so on. It is too bad they did not get excited about the trust the public had given them. In the back of my mind I think of people who need more than $40 a month in old age pensions. I think of civil servants, who gave service to Canada just as loyal and faithful as that of any Prime Minister we ever had, and who cannot exist on the pensions they receive. I think of the crippled people who cannot provide for themselves. I have in mind what is needed to carry on the defence of this country. Then I visualize the building we are now constructing at a cost of almost a million dollars. I cannot see there any desire on the part of this government to save. The gross mismanagement of that proposition is only in keeping with almost every other item that this government has tackled. You do not have to enumerate them all. This one will stand forever as a glowing example of the mismanagement of the Liberal government, at least for the year 1951.


Daniel Aloysius Riley: Mr. Speaker, I would first like to say a word in congratulation to the junior member for Halifax (Mr. Balcom), who through his splendid speech this afternoon ably showed us that he is ready to follow in the distinguished footsteps of his predecessor, who has gone to another place, and take his place alongside the senior member for Halifax (Mr. Dickey), who has already set such a fine pattern in this chamber.


Mr. Knowles:: The other place from which no traveller returns.


Daniel Aloysius Riley: Some of them go elsewhere. While I am speaking congratulatory words, I should like to say something about the speech just made by the hon. member for Simcoe North. It was a stirring speech, and its forensic

qualities left little to be desired. I only wish that other members of the official opposition would take it upon themselves to level such sound constructive criticism towards the government. If they did, I am sure that mahy of us on this side of the house would not hold such dim hopes for the survival of the remnants of that once great party.
This afternoon the hon. member mentioned what might be done if he were prime minister. I would point out to his party that they could do worse than select him as their leader. He personifies everything that could be wished for in the grand old traditions of Toryism. It is not for him to say one thing and mean another; not for him to pussyfoot around by saying they want price controls and neglect to mention wage controls, but for him to follow in the straight pattern set by Sir John A. Macdonald and Sir Robert Borden, the pattern of real old Toryism.
I cannot help but add my congratulations to those already so well expressed to the Minister of Finance (Mr. Abbott) on the sound budget which he presented to this house on April 10. Having regard to the immensity of his task and the weight of the accompanying responsibilities, I cannot in justice to him wish him many happy returns. But I am able to say that the citizens of Canada, whose unqualified confidence he has enjoyed over these past years, are secure in a deep sense of continued confidence in his management of our fiscal policies.


Mr. Hatfield:: You do not believe that.


Daniel Aloysius Riley: The hon. member for Victoria-Car leton (Mr. Hatfield) enjoys perhaps more than any other member in this house and the other citizens of the country, the fruits of his administration.


Stanley Howard Knowles: You mean potatoes.


Daniel Aloysius Riley: I should think the hon. member would be ashamed to go home and face the good people of Victoria-Carleton after making such sneering remarks towards any speaker on this side of the house.
We are presently experiencing a degree of inflation, with all its attendant evils. I would urge the Minister of Finance, and the economic advisers of the government, to make a renewed effort to devise some means whose effect might be immediate for the protection of that segment of our population which appears to be helpless in its efforts to combat the inflationary force in whose toils they have become enmeshed. Many of us, by stifling tendencies towards extravagant spending and by purchasing the minimum of our requirements, can, by voluntary self-sacrifice, keep delaying the day when the imposition 80709-147
The Budget-Mr. Riley of harsh bureaucratic controls, with all their attendant dangers, may become necessary.
Those in the lower salary groups with fixed incomes, such as clerks helping in retail establishments, married and with families, are not able to meet their obligations with prices at their present levels. There are many of those people, not only in my constituency but in most others across the land and more particularly in urban areas, who are not earning more than $20 or $25 weekly. By adding to this small wage the receipts from family allowances these people are not, with prices at their present levels, in a position where they can provide for their families even the bare necessities of life. With the retail price of beef ranging from 75 cents per pound upward, and even stew beef selling at 70 cents a pound, with eggs at 70 cents a dozen, butter at 70 cents a pound and higher, and milk selling at 20 cents a quart, flour at 8 cents a pound and bread as high as 13 cents a pound and higher, not to mention the exorbitant prices of fuel, clothing and accommodation, it is little wonder that so many of these people, working as they are over long hours and without benefit of union intervention on their behalf, are complaining bitterly over their difficulties.


Heber Harold Hatfield: Hear, hear.


Daniel Aloysius Riley: I am afraid I would not hesitate to suggest that some of these people on small fixed incomes may even be employees of the member for Victoria-Carleton.


Heber Harold Hatfield: Oh, no.


Daniel Aloysius Riley: Would you show us a schedule of your wages? I am afraid that in our efforts to effect a curb on prices, we are perhaps overlooking those citizens-


Mr. Hodgson:: Cheap politics.


Daniel Aloysius Riley: The hon. member who just
passed that remark should blush with shame to do so, because I have heard him on the floor of this house resort to what he describes as that type of politics.


Clayton Wesley Hodgson: You have done a lot of
heckling, too.


Daniel Aloysius Riley: I am quite prepared to continue, and you may do all the heckling you want. I would not suggest that your teeth might fall out, because I believe they are your own.


Stanley Howard Knowles: Is the hon. member addressing the Chair?


Daniel Aloysius Riley: I shall do so from now on. I was addressing the hon. member because I was carried away for the moment.
I am afraid that in our efforts to effect a curb on prices up to now, we are perhaps

The Budget-Mr. Riley overlooking those citizens who are beginning to class themselves as being in the forgotten estate. The imposition of price and wage controls at the present time would leave them as helpless as they are now because their present wages are hopelessly inadequate. This may sound like an exaggeration, but I would defy anybody, as the head of a family of three or four, with small children, and living in a city, in rented accommodation, to feed, clothe and house that family today on an income of $125 or even $150 a month. It just cannot be done. Because those whom I describe find it virtually impossible to move about in quest of more lucrative employment, some agency should be established by the government or otherwise whose duties it would be to assist these people to obtain a more equitable return for their services.
The last time I had the privilege of speaking in this chamber I expressed some considerable concern over the unemployment figures in my own constituency and in other maritime constituencies. Since then I have seen very real evidence of the effort which is being made by the Minister of Trade and Commerce (Mr. Howe) to direct, wherever reasonable and feasible, a flow of defence work to industries in our eastern provinces. His appointment of responsible officers in his new Department of Defence Production to ensure continuity of this policy is being received with a sense of relief by our people.
I am also pleased at the interest which is being shown in providing work for the large drydock and shipbuilding yards in my own city of Saint John, where both management and employees as well as citizens generally are eagerly awaiting news of an extensive program of construction and repairs. I would imagine that perhaps this policy will even be enlarged upon after the Minister of Trade and Commerce reads the speech which was so ably delivered by my friend the hon. member for Simcoe North (Mr. Ferguson). Up until now work has not been sufficiently steady in this industry to warrant our steel workers remaining in Saint John, and we have been in constant danger of losing them to other and busier yards.
I would call the attention of the Minister of Transport (Mr. Chevrier) to the necessity for extending dock facilities on the eastern side of Saint John harbour. Since the completion of the Pugsley terminal a little more than a year ago, we have been left with excellent docking and loading facilities which cannot be properly exploited unless this new pier is extended at least to Reed's Point, so-called, which lies directly south of it. The recently-experienced congestion on the


western side of our harbour has brought sharply into focus the necessity for completing this project. Until this extension is proceeded with, it will not be possible to lay railway tracks between the large new sheds and the face of the pier and thus make it possible to load lumber and other cargoes aboard ship without loss of money, time and effort.
Saint John harbour is one of the most important shipping points in this country, and I say that with due and humble apologies to the hon. junior member for Halifax (Mr. Balcom). As the present crisis develops, it becomes increasingly urgent that we make every possible effort to meet an emergency. When the broad general curbs were put on the expenditure of public funds for all but essential public projects, surely these curbs were never intended to apply to a pier for ocean-going vessels which is just as essential to our defence requirements as are jet fighters or field artillery. If the construction of this pier is not proceeded with at the present time, we may shortly be facing congestion of a most serious nature brought on by an emergency which hovers on the horizon. When the supplementary estimates are brought down, I sincerely hope that provision will be made therein for completion of this vital project.
I shall hold until a later date my appraisal of the report of the Turgeon commission on transportation, but references made to the seaway project in the course of this debate impel me to say that the finding of that commission in respect of the Chignecto canal leaves me with a cold feeling toward the St. Lawrence seaway. Like the hon. member for Gloucester (Mr. Richard), I am not opposed to this project; but it is difficult for us to become enthusiastic over it when the Turgeon commission, after but a cursory examination of only a small part of the evidence available, and that of a documentary nature, has so effectively shut the door on the arguments put forward in support of the Chignecto canal. That part of the report dealing with the canal has as effectively stunned a large section of our population in the Atlantic provinces as though they had been sandbagged.


Mr. George H. Hees (Broadview):: Mr. Speaker, tonight I should like to deal with three aspects of the current budget. The first aspect with which I should like to take issue is the fact that there is no increase in the tax on alcoholic spirits, while at the same time the taxes on many of the necessities of life have been materially increased.
If there ever was a luxury, it is alcoholic spirits; and those who consume them can certainly afford to pay an increased tax. If

the tax had been increased on alcoholic spirits, it would have been possible to eliminate, or greatly to reduce, the increased tax which has been imposed on many of the necessities of life.
In this action I believe that the government is guilty of favouring those who can afford luxuries, at the expense of those who are struggling, against an ever-increasing cost of living, to feed, clothe and house their families.
The second aspect of this budget with which I should like to take issue is the fact that it contains no provision for halting the ever-increasing rise in prices. The increased taxes themselves add to the cost of living. Unless price control is immediately imposed, prices will continue to rise, and pensioners and others in the lower income groups will continue to suffer ever-increasing hardship and privation.
I believe that this persistent refusal on the part of the government to bring in price control is a callous disregard of the needs of the people.
The third aspect of this budget with which I should like to take issue is the statement made recently by the Minister of Finance (Mr. Abbott) that those serving in our armed forces overseas are no longer exempt from the income tax.
This is a complete reversal of the policy adopted by the present government during the last war; a policy which met with widespread and general approval by all of the people of this country.
In attempting to explain his action, the minister said he believed that no type of employment in this country should be exempt from income tax. That is quite satisfactory when applied to those of us who live and work in the comfort and security of Canada, but it is quite another matter when you are dealing with men who are daily risking their lives to fight our battles overseas.
I believe that those who serve overseas in our armed forces should be exempt from income tax. That is the very least we' can do for these gallant men.
Now I should like to deal with a matter which is of vital importance to all Canadians, namely, the matter of a health insurance plan for this country.
One of the great needs of people today is to find some way by which the financial cost of sickness or accident can cease to impose a crippling burden of debt upon .individuals and families.
When sickness or accident strikes today, one of two things usually happens; either the 80709-1474
The Budget-Mr. Hees proper care and treatment are not given, because the financial cost is too high; or, if proper care and treatment are given, the family or the individual is dealt a financial blow, from which it may take many years to recover.
I believe that we cannot allow either of those conditions to continue any longer. Both can be overcome by a system of universal contributory health insurance.
It is obvious that if a health insurance plan is to be successful, it must receive the wholehearted support and co-operation of the doctors and dentists of this country. It must interfere as little as possible with the present method of administering to the health of this country, which has proved to be very satisfactory indeed. It should concern itself with finding some better method by which people can pay their bills for the medical and dental services which they do receive. Now, how can this best be done?
I believe that the system employed in Great Britain today is not satisfactory, because it has succeeded in lowering the quality of service to the individual. All services in Great Britain have been free, and the "something-for-nothing" aspect has caused those who really do not need treatment to flock to the doctor's office. They have done so in such large numbers that the time which the doctor or dentist can devote to any individual patient is so short that the treatment which any one patient can receive is, of necessity, superficial.
The "something-for-nothing" aspect of the British plan is, of course, a complete myth, because the full cost of the plan must be borne by the people, both in regular contributions and in taxes.
I believe that the best kind of plan for this country is that which has proved successful in Sweden and in a number of other European countries for a number of years. Under that plan, 75 per cent of the cost of treatment or hospitalization is met out of a health insurance fund, which is maintained by regular contributions from all of the people.
The other 25 per cent of the cost of treatment or hospitalization is paid by the patient, and this removes the "something-for-nothing" aspect of the British plan. It is sufficient to ensure that those applying for treatment really do need it. On the other hand, it is not so much as to impose a severe financial burden on the individual or on the family.
It is obvious, I believe, that the 25 per cent of the bill which the patient pays reduces the over-all cost of the plan by that amount, and the regular monthly contributions which the people pay are therefore 25 per cent less

The Budget-Mr. Wright than they would be under a plan which pays for the whole cost of the treatment. The cost of the plan is also kept to a minimum, because only those who really need treatment apply for it.
The scale of fees which doctors and dentists would charge could be set up very easily through consultation with the medical and dental professions. The doctor-patient relationship will remain exactly the same as it is today. The only change would be that the patient would pay 25 per cent of the bill, and the doctor would submit his account for the remaining 75 per cent to the health insurance fund.
I believe that this type of plan will work, and that it will materially improve the health of the people by insuring that they receive the proper treatment when they need it, without imposing an undue financial burden either upon the individual or upon the family.
I believe that this type of plan should be studied by the government, and should be presented to parliament for its consideration at the very earliest opportunity.


Mr. P. E. Wright (Melfort):: Mr. Speaker, I should like to congratulate the hon. member for Saint John-Albert (Mr. Riley) on his very well balanced speech. He spent about a minute and a half in praising the government and twenty minutes in a very pointed criticism of it. I think that is a fair indication-


Daniel Aloysius Riley: Only suggestions.


Percy Ellis Wright: -of the value of this government to his constituents. In a speech he made some time ago he criticized the government quite severely with regard to the distribution of industry in Canada, and he received-


Daniel Aloysius Riley: It has been corrected now.


Percy Ellis Wright: -very good publicity on it.


Daniel Aloysius Riley: That has been corrected now.


Percy Ellis Wright: Tonight he criticized them with regard to the unemployment situation, the high cost of living and low wages. I agree with him entirely in his criticisms. I think he should come over with us, here; we would welcome him on this side of the house. He makes some very valuable criticisms of the government.


Daniel Aloysius Riley: If some of you fellows-about sixteen of you-were not with the party, I would be delighted to come over there.


Percy Ellis Wright: I had not intended to enter the debate until I heard the speech of the hon. member for Coast-Capilano (Mr. Sinclair) this afternoon. He seems always to
[Mr. Hees.l
be able to provoke me into making another speech, and has done that today by quoting briefly from a publication distributed quite recently to all members in the house, and put out by the Labour party in Great Britain. He quoted from this publication to prove certain points with which I shall deal later. Before he did that however he indicated that some people, in making statements and speeches, are apt to shade the facts. He used that argument in an effort to justify certain publications put out by the government to make the people better acquainted with the facts.
But sometimes, even in publishing facts, such facts can be stated on one side of a case, and shaded to an even greater extent than if no statement had been made at all. I do not think the hon. member should have used the expression "shading the facts", when he was criticizing recommendations from this side of the house with regard to higher income tax. As a matter of fact the hon. member for Coast-Capilano gave the impression that the wealthier people in this country were retaining only $4 out of every $100 subject to income tax. He did not say, however, that the man who is receiving an income of $250,000 has over $50,000 left after he has paid his income tax. He did not say that there is kept out of his income $96 out of each $100 only when the income exceeds a quarter of a million dollars. In other words he still keeps $4,000 out of every $100,000 over the quarter of a million dollars of income; and I am sure he is not being hurt at all by that procedure. He still has a very good income remaining, and is in a much better position than the old age pensioner, those who are receiving widows' allowances and many other persons on fixed incomes in this country.
I think the hon. member for Coast-Capilano was perhaps shading the facts a bit when he quoted only one small portion from the pamphlet to which I have referred and which has been issued and distributed. It seems to me there are many interesting facts set out, and I should like to place on the record tonight some that the hon. member failed to place on the record this afternoon. He took only that part which suited his own argument.
The pamphlet is entitled "This Cost of Living Business," and covers widely the position in Great Britain in connection with the cost of living in and the productivity of that country. The hon. member for Coast-Capilano suggested that if those of us in this group were placed in a position where we had to bring down a budget we would tax corporations to a point where they would

have nothing left for reinvestment, and there would be no capital expansion in the country.
I would bring to the attention of the house the fact that this party was organized in 1932, at a time when there was very little capital expansion, at a time when, because of the failure of private enterprise to make the necessary capital expansion and to develop the resources of the country, hundreds of thousands of people were without employment. One of the objectives of this group was to see that we stopped this boom and bust economy we have under free enterprise, so that we might have in Canada an expansion of our productivity which would give employment to all our people and would develop the resources of the country as they should be developed.
The government in Great Britain has increased the productivity of that country. In this pamphlet it states that productivity is increasing rapidly.


George James McIlraith: The hon. member has given the title of the pamphlet; would he place on record the names of the publishers? He will find it on the back.


Mr. Coldwell:: The hon. member did that. He said it was published by the Labour party.


Percy Ellis Wright: It is published by the Labour party.


George James McIlraith: The point I wish to establish is that it is not a government document; it is a party propaganda document.


Stanley Howard Knowles: It is the same pamphlet from
which the hon. member for Coast-Capilano quoted this afternoon.


Daniel Aloysius Riley: Socialist propaganda.


Percy Ellis Wright: It is the same pamphlet from which the hon. member for Coast-Capilano was quoting this afternoon.


George James McIlraith: That is right.


Percy Ellis Wright: The Budget-Mr. Wright has ended, and furniture, furnishings, household linen, washing machines, vacuum cleaners and television sets have been taken off the ration list and the consumption of these goods is much larger than it was before the war.
The parliamentary assistant to the Minister of Finance did not go on to show direct controls in Great Britain had played a large part in maintaining this lower cost of living. About 60 per cent of the total spent by the nation is spent on things covered by price controls.


George James McIlraith: I wonder if the hon. member would permit a question? I am trying to follow his argument. He has taken a set of figures covering the period from 1946 to 1950 and then argues with regard to conditions in Great Britain now. Has he any figures that would bring the ones he is quoting up to date and which would deal with the sharply rising cost of living there, which perhaps is no sharper than anywhere else?


Percy Ellis Wright: I have only the figures up to -


George James McIlraith: The hon. member seemed to be speaking about the present and the past in different parts of the same argument.


Major James William Coldwell: The hon. member for Coast-Capilano (Mr. Sinclair) quoted from this pamphlet and the hon. member has a right to quote in rebuttal.


George James McIlraith: I was simply trying to clear up one point in his argument.


Percy Ellis Wright: This pamphlet was introduced first by the hon. member for Coast-Capilano. The hon. member for Ottawa West (Mr. Mcllraith) has it in his hands. This brings the figures up to 1950 but it does not give the 1951 figures. I do not think they are available, but I think what is here proves my point.


George James McIlraith: The cost of living figures are.


Percy Ellis Wright: The cost of living in Canada went up 4 [DOT] 5 points in one month and undoubtedly will show a rise in the future when the results of this budget are incorporated in retail prices. There is no doubt that some of the features in the budget will act against inflation in their long-term effect, but the short-term effect of the budget will be to create further inflation. You cannot increase the sales tax by 25 per cent, a tax which is imposed on a large proportion of the goods consumed in this country, without an inflationary effect. You cannot increase the excise taxes on other goods without the first effect being inflationary.
Some parts of the budget, such as that part wherein they have taken steps to prevent depreciation being allowed on certain types of construction for the next four years, no

doubt in its long-term effect will be deflationary. As a matter of fact that is something which we in this group have been trying to bring to the attention of the government for some time. The accelerated depreciation allowed to industry by this government immediately after the war was inflationary. One of the major causes of the present inflation in this country was the tremendous amount of money spent on capital expansion. While a reasonable amount of capital expansion is absolutely necessary, it is possible to have too much especially for the production of non-essential goods.
This article shows that there is being used for capital expansion in Great Britain about 20 per cent of the total production. According to the figures given by the Minister of Finance (Mr. Abbott), if my memory serves me correctly, we are spending about 18 per cent of our total production in capital expansion. Only when we balance our capital expansion against the sale of goods will we have a balanced economy. There will have to be some planning of our economy if we are not to have the booms and-busts we had in the past.
Because of certain measures introduced by the government immediately after the war in their decontrol policy and in giving accelerated depreciation on capital expansion we have the inflationary spiral in which we find ourselves today. That was one of the major causes. While I admit that certain parts of the budget are deflationary in effect, nevertheless the immediate effect is inflationary. I do not think that anyone who considers the budget as a whole can get away from the fact that it is inflationary.
As far as we in this group are concerned, we have always believed that we should set aside a certain amount of our national income each year for capital expansion. That is one of the first principles of this party. We agree that you cannot have your pie and eat it too. If the hon. member for Ottawa West would get a copy of Comment for March, 1951, published by the C.C.F., he would be able to get some idea of the policy of this group with regard to capital expansion. With regard to the slice of the Canadian pie, which is the total productivity of this country, it has this to say:
The size of your particular piece will depend on these and other factors:
(1)	The size of the pie itself.
(2)	The proportion devoted to investment in capital goods.
And later on:
The bigger the pie the more there is likely to be for each. Thus, we all have a stake in higher production. To get maximum production we must employ all our human and material resources. Nobody should be out of work and no factories

should be idle. To make the biggest possible pie we must have the highest possible rate of productivity. This means both a full day's intelligent work each day by the members of the labour force and the best possible tools and equipment for the labour force to work with.
With regard to the reinvestment of capital, it states this:
Capital investment should be stabilized at an appropriate proportion so that we shall have continually increasing productivity in the years ahead. (The proportion was 18 per cent in 1950). It would be foolhardy to seek a bigger piece of pie this year if it means smaller ones in the years ahead.
It is essential that there be capital investment in any country. The basic policy of this group is that that capital investment should be planned so that there will be capital investment in new production and the bringing in of new resources over the years. That portion of the profits of corporations which is put back into capital investment for the production of necessary goods would never be touched by this party. It is absolutely essential that there be reinvestment in capital production. One of the things that we object to is a corporation coming into this country, investing in our natural resources, and then taking the profits which they make out of this country rather than reinvesting them in Canada. That is one type of profit which we believe should be taxed. The reinvestment of capital for the purpose of expanding production and developing our resources has always been a major plank in the platform of this group. Mr. Speaker, the hon. member for Ottawa West got me away from the matter I was discussing, but perhaps that is a good thing if it has removed any doubt from his mind as to the policies of this group with respect to capital investment.
Before concluding I should like to deal briefly with the development of the Saskatchewan river. We have had several speeches urging that at this session the government should bring down an item in the estimates which would indicate their intention of going ahead with the South Saskatchewan river project. The Minister of Agriculture (Mr. Gardiner) is in his place. He knows the province of Saskatchewan is very anxious to see this development proceeded with. They have agreed with him and with the P.F.R.A. officials to accept responsibility for their share of this project. One of the main reasons they are anxious to have it proceeded with immediately is the need for power in Saskatchewan. At the present time there is a real shortage of power. Owing to the rural electrification scheme introduced by the present government there has been a tremendous increase in the amount of power used.
The Budget-Mr. Wright
At the present time that power is developed mainly in two ways, from coal at Estevan and from crude oil through plants in centrally located areas. Their whole system has been set up with the idea of eventually using power from two developments on the Saskatchewan river, the first on the South Saskatchewan and the second at Fort a la Corne, just below where the two forks of the Saskatchewan join, north of Kinistino in northeastern Saskatchewan. An amount of approximately $1 million has been placed in the estimates for this development this year, but that will not be sufficient to get the South Saskatchewan project under way. The dam is going to be largely of earth, and it is estimated that it will take seven years to complete that part of the project and approximately ten years to complete the whole pregram of irrigation and power development. The cost to the federal government is estimated at between $68 and $69 million and to the provincial government somewhere between $34 and $35 million. If we are only going to spend $1 million as provided in the estimates this year it will take about 70 years to get the dam built, and I am afraid most of us, including the Minister of Agriculture, will not be very much interested in the matter then.
In my opinion this South Saskatchewan development is only a small part of the total development of that river. I think it necessary that this be gone ahead with first in order to control the flood waters of the Saskatchewan, but there is a further development at Fort a la Corne which will supply almost as much power as the South Saskatchewan project. Then if we go down to the estuary of the Saskatchewan and Carrot rivers we find, according to a survey made by the P.F.R.A. during the last two years, between three and four million acres of the best land to be found on the continent of North America. This is not in use today because of flood conditions. We do not have the figures of just how much money would be required to prevent this flooding, but I doubt if it would be as much as we are going to spend on the South Saskatchewan project. I doubt if it would cost $100 million to prevent the flooding which takes place in that area. If this flooding could be prevented through dams further up the Saskatchewan which would hold back the water, and if that area could be placed under cultivation, we would have not 500,000 or 750,000 acres of new land that could be irrigated under the South Saskatchewan project, but probably 3 to 4 million acres of the best land on this continent. As a result production in that
2302	HOUSE OF
The Budget-Mr. W. J. Browne area would be greatly increased'. Approximately two and a half to three million acres of this land lies in Manitoba and the remainder of almost a million acres in Saskatchewan. I am sure this is the largest single area of undeveloped land remaining in Canada, and it is probably one of the last large areas that can be opened up for development.
These are projects which should be developed. We all realize that with the present world situation we have to make large expenditures for defence; but if this country had maintained reasonable price controls we could have saved a large part of those expenditures. It is estimated that our defence budget this year will be approximately $1,600 million, and that in the next three years we are going to spend $5,000 million on defence projects. Anyone who will take the trouble to compare the prices we have to pay for equipment today with the prices we were paying in 1944 and 1945 will discover the startling fact that to buy airplanes and tanks today it costs the government approximately $3 for every $1 it cost in 1944. In other words if we had maintained some controls over prices and basic materials in this country we would have been able to get the same amount of war production for just one-third what we have to pay today. Then some of the money that could have been saved by reasonable controls in this country could have been spent on the development of new areas and the extension of railway lines, so that we would have been in a much better position to produce the sinews of war than is the case today.
I suggest to the government that while we are engaged in an effort to build a defence force that will work for peace, there are other projects which will also work for peace. The development of the food supplies of this country to the point where we had exportable surpluses that could be used to feed hungry peoples probably would be an even greater contribution to peace than our armed forces. Eventually we will have to realize that we cannot continue to have large areas of undeveloped territory while millions of people starve in the crowded countries of Asia. Only when we realize that and begin to develop our resources so that through their use we can supply some of the needs of the world will we be able to contribute effectively to peace.


William Joseph Browne: Mr. Speaker, I rise to offer some observations of a general nature on some statements contained in the budget speech of the Minister of Finance (Mr. Abbott). I believe it is fair


to say that the good humoured appearance and manner of the minister in introducing his budget this year indicated that he did not find raising the necessary money a very difficult job. Anyone who examines the sources from which he is going to get his new taxes, $405 million, will see there are only half a dozen items from which he will get that large amount of money. It says something for the efficiency of the tax structure of Canada that such a great amount can be raised so simply.
The economic survey given by the minister draws attention, in my opinion, to the great influence which governments today have upon the direction and development of trade and commerce. Institutions like the wheat board, and legislation like the Agricultural Prices Support Act, the Fisheries Prices Support Act and the Agricultural Marketing Act, affect the prosperity of farmers and fishermen to a great extent. Controls and subsidies, taxes, duties and rates of exchange, can all be used by a minister of finance to bring about what he considers the best results for the people of this country.
It is startling to examine the figures given by the Minister of Finance in that respect. For example, he said that the action of the government in September, 1949, in altering exchange rates, had this effect: That the imports from the United Kingdom increased by 32 per cent; imports from countries other than the United States increased by 27 per cent; exports to the United States increased by 34 per cent; exports to the United Kingdom declined by 33 per cent. He said that trade was, in that way, balanced. I think we will all recognize that trade is a delicate thing when it is capable of such sudden and swift reversal. It happens that the way it went was all right, but if it had gone the other way the Minister of Finance would not have been in such good humour two weeks ago.
The remarkable increase in industrial activity in 1950, after the depressing start that we made last year, has resulted in increased earnings, increased profits, increased prices and, for the government, increased revenue. As the Minister of Finance would be the first to recognize, this increase was principally accounted for by the developments that took place last June when the North Korean forces invaded the south. It is remarkable how closely associated the country's prosperity seems to be with war. Of course, this is illusionary. While many people make profits out of war, those who are least able to bear the effects of war find that, as prices have gone up, their standard of living has been lowered. Whether this increase in Canada's

prosperity would have occurred but for the Korean affair is very problematical.
The minister draws attention to the increased productivity in European countries, and shows how they have expanded their production considerably in advance of what it was in 1939. To some extent the productivity of those countries during the past year is also attributable to war preparation. It is due, in large part, to the cumulative efforts of the aid which was distributed through the Marshall plan to those European countries whose recovery was considered to be necessary and desirable. Arrangements for this aid were made with the object of preserving those countries from falling under the influence of communism. So far as the United States itself is concerned, the effects of the Korean war in economic and commercial affairs have been greater than here. In the United States they have introduced a measure of price control, and there is reason, I believe, to feel that it is going to be successful.
Although in his speech the Minister of Finance indicated an appreciation of the menace of Russia to the free nations of the world, the policy of the government during the past year has shown only a fraction of the anxiety and fear that seem to be actuating the people and the government of the United States. It seems strange that these two countries, side by side and possessing the same knowledge of the dangers threatening the free world, should view this threat in such a different manner. The United States has taken most extreme measures to resist this threat. They have introduced compulsory military service, and are trying to conscript youths as early as eighteen years of age, whereas in this country we are going along dependent upon a half-hearted recruiting campaign to get 150,000 men in three years. At the conclusion of it we shall have in proportion about as many men as Belgium had in 1949.
When the armies of North Korea invaded South Korea last June, a quick victory by the communists was prevented only by the rapid action of the United States which was the only country possessing sufficient trained men to go to the assistance of the hard pressed South Korean forces. Canada had no troops to send. Three or four days after this aggression had occurred, parliament adjourned without having made any preparations for Canada to play its full part. Although Canada sent three ships of war, and gave other material help, it was unable to provide the ground forces which were most needed in that crisis. By the time the special session was called in September, the situation had become more grave but the 80709-148
23, 1951
The Budget-Mr. W. J. Browne government seemed to view the situation with no greater sense of urgency or concern. It is true that at that time powers were taken to raise money, and we did vote a large amount of money. Power was taken to recruit a special force for service wherever the United Nations wanted it to be sent. But here we are, ten months after the outbreak of the war, and Canada today has only one battalion in the field and 6,000 men en route.
I noticed that in a speech at Toronto the other night the Secretary of State for External Affairs (Mr. Pearson) said that people in the U.S.A. were complaining that Canada was not doing its share, because it was only doing one-twelfth or one-sixteenth when it should be doing more. He said, how is it no one says Argentina or Egypt is not contributing an equal share? I think it is due to the important position Canada has been playing in world affairs. Because of its actual wealth and its potential wealth, more is expected of Canada today than those countries which he mentioned. Our own deficiencies are reasons which should make us thankful that we are a neighbour of the United States. We receive protection from the United States that I do not think we fully appreciate. I am quite sure that if the United States were not there with its powerful forces there would be nothing to prevent Russia from attacking us instead of looking for objectives in Asia.
Not only those living in Canada but the whole world, as the Secretary of State for External Affairs has repeatedly said, owes a great debt to the United States. If it had not been for the decisive action of the United States in June, what would the United Nations have done? I contend that without the leadership of the United States there would be no United Nations today. If it had not been for the action of the United States, Korea would now be under communist control, and it is quite feasible that communist forces would have since invaded Formosa or even Japan. Because of the magnificent leadership of the United States in world affairs, I think it was rather surprising that the Secretary of State for External Affairs should speak as he recently did in Toronto. Some country must take the lead in upholding the principle of international justice and morality. What nation is better qualified to do so than the United States which, for several years past, has been distributing largess to all the nations of the world with a lavish hand from its vast resources? What nation today could equal the vast efforts she is making to rearm herself and protect the other nations of the world against aggression? What nation can say that the United States is doing less than her share for the maintenance

The Budget-Mr. W. J. Browne of world peace and the protection of the weaker freedom-loving nations of the world against aggression? There is no country so well qualified, for so many reasons, for the all-important task of world leadership. This is the role that the majority of nations have given to the United States today. The statesmen of other countries, whose contributions do not compare with those of the United States, I think should therefore refrain from publicly rebuking the United States for performing the duties which leadership of that nature requires.
The Secretary of State for External Affairs has complained about the criticism of Canada by people in the United States. He should remember that on at least three occasions in the past year the Prime Minister of Canada (Mr. St. Laurent) did not hesitate to speak his mind quite frankly and quite firmly on subjects concerning the United States and on one occasion that I remember, whilst visiting the United States, the subject matter of his comments was of no apparent concern to Canada at all. If words have meanings, leadership implies followers who are filled with zeal and are loyal to the leader in the pursuit of those noble objectives of world peace and security and the social and economic progress of all the nations of the world. Such an attitude does not, of course, imply slavishness or obsequiousness. It seems to me that the discussion in Canadian forums, by cabinet ministers, of questions such as the unfavourable criticism of certain groups in- the United States is of doubtful value. It certainly seems to be far from the traditional idea we have had of the art of diplomacy. It seems to me that we are copying the bad example of the Russians who, by their brazen, openly aggressive and even insulting tactics, have made diplomacy so difficult today. Canadian public men it seems to me should not adopt those tactics. It is regrettable if they do; but that they should consider it necessary seems to show our helplessness in these difficult times, and the necessity for our depending upon God's help in the work which we have in hand.
For the success of the lofty undertakings entrusted to the United Nations more than diplomacy and ability is necessary today. I know that it is probably quite trite to say it, but everyone recognizes that we need the great virtues of patience, wisdom, charity and humility, and that we need to put our trust in God more than in guns. But throughout it all we need perseverance, keeping in sight the final aims we have in mind.
I am encouraged to offer these comments by some of the observations made by the Secretary of State for External Affairs, in his

speech in Toronto, when he said that foreign affairs are now the business of every Canadian family and the responsibility of every Canadian citizen. If such a statement applies equally to the citizens of the United States, I should like to hear his appraisal of the tremendously popular welcome given to General MacArthur on his return after his sudden dismissal from the high posts and the high offices which he has held because of the views which he had publicly expressed on the manner in which the Korean campaign had been carried on.
What are the aims of the United Nations? How many members of this house here tonight can tell what are the aims of the United Nations now in Korea? I do not believe anyone knows, not even my hon. friend the Minister of Veterans Affairs who represented Canada so well at the United Nations -this year. But I should like to draw attention to the statement made by the Secretary of State for External Affairs at the United Nations general assembly on September 27 last when- he laid down- five objectives that -the United Nations should -have. The first three of them -are as follows: First, a united and free Korea; second, assistance by the United Nations to the peoples of Korea in establishing peace and order throughout the territory of Korea; and third, a Korea not divided or disturbed by subversive communist elements directed from outside Korea.
Recent events seem to indicate a serious weakening in the resolution of the United Nations to attain these ends. Now no one hears any mention of a solution to the Korean problem at all that would require, for example, the aggressors to pay compensation for the damages and injuries they have inflicted upon the United Nations forces. Nevertheless, reparations of that kind seem to be imperative if international justice is to be respected. Those responsible for the conduct of the affairs of the United Nations should remember that it is desirable to have clear and definite aims and objectives. If these aims are always to be thwarted and negatived or neutralized by the fear of possible communist disapproval or action, then the work of the United Nations, in its most important aspect-the pursuit of peace and its maintenance-would be reduced to its lowest level. It would be better to reorganize the United Nations and proceed without the presence of Russia than always to have to submit to communist dictatorship and veto. For example, if Russia had happened to have judged the situation aright and to have been present at the security council at the time that the northern armies of Korea invaded southern Korea, I think that she would have been far more successful. It was only the

absence of Russia from the security council that permitted the measures to be taken which resulted in the defeat of North Korea.
To one who comes from a country which owes the loss of its independence to the inability of finance ministers to balance its budget for a number of years, the ease with which the Minister of Finance accomplished his task is a source of great astonishment. I realize that Canada in the early thirties was also having its financial difficulties and its budget remained unbalanced for many years. But during the war the revenues increased and if it had not been for the extraordinary war expenditures, the excess of revenues over expenditures would have been great.
The potential wealth of this country is amazing. Under the very walls of this building the mighty Ottawa river flowing majestically to join the St. Lawrence is already, to the people of Ontario and Quebec, a great source of electrical energy and power and is capable of producing even greater quantities of electrical energy and power. The mighty St. Lawrence river could prove to be an immense reservoir of electrical energy; and in my opinion the wealth and production of those two provinces are closely associated with the fact that they possess within their borders this great source and cause of wealth. The growth and prosperity of Montreal, Toronto and the cities and towns adjacent to the hydroelectric developments are due in great measure to the availability of the supply of electrical energy. I should like to see the St. Lawrence waterways project become a reality. Yet I sympathize with the hon. member for Cape Breton South (Mr. Gillis) and the hon. member for Annapolis-Kings (Mr. Nowlan) for the anxiety which they feel lest the deepening of the St. Lawrence and the development of the canal system should spell further decline for the maritime provinces. It seems to be understood by them-and I believe their opinion is generally shared by the members in all parties from the maritimes-that the maritime provinces will decline in proportion as the central provinces improve their financial and economic position. This should not be so, and it should not be beyond the wisdom of the statesmen of this country to investigate the cause of these fears and dispel them. It is a remarkable thing to me, who came into confederation just a couple of years ago, to find that after 84 years of confederation the members from the maritimes rise in their places and speak of the mistake that was made as if it had been only yesterday. They feel so bitterly that today they question the advisability of this vast project which seems to be full of benefits for Canada as a whole.
80709-148i
23, 1951
The Budget-Mr. W. J. Browne I can only re-echo the sentiments expressed by the junior member for Halifax (Mr. Balcom) in his speech today, on which I also congratulate him, when he said that he could not see how something which was going to be of general benefit to Canada as a whole should be of disadvantage for any considerable part of it. It seems to me, however, that the government should take these matters into consideration seriously and do all in their power to alleviate the injustices of which the members from the maritimes complain.
It was remarked in the Turgeon report that the central provinces had no complaints or questions to ask about the freight rates that prevailed in Ontario or Quebec. That was a significant fact. It showed that it did not matter which way the freight rates went, Ontario and Quebec would be prosperous anyhow. I know that by union of Newfoundland with Canada the economy of Newfoundland has been seriously affected, and with a view to putting that economy on a sounder basis I have repeatedly drawn the attention of this house, and especially of the Minister of Agriculture (Mr. Gardiner), to the promotion of agriculture in Newfoundland. I have tried to induce him to come down and visit us, but he has not yet found it convenient to do so. He is such an expert on such a matter that I believe it would be helpful to us if he did find it convenient to come.
I have great faith in Newfoundland. I think that it can produce a far greater share of the food and the clothing that it needs if agriculture is properly developed. Agriculture is a subject that comes especially within the duties of the federal government, and I do not think it is fair for the federal government to leave so much of the solution of this great economic problem to the greatly handicapped department of agriculture in Newfoundland. They have only one or two officials down there. They have not got the experts in all departments that the federal government has. I would plead with the Minister of Agriculture again this year that he come to see us and see for himself our possibilities, and see if he cannot give us greater help than we have yet received from the federal government.
Somewhat different considerations apply to the question of the fisheries. In the remarks that I made on the speech from the throne I urged the government of Canada to do in Newfoundland as they had done in Nova Scotia, namely, send a man down there to organize the fishermen. Well, I do not know whether the Minister of Fisheries (Mr. HOUSE OF
The Budget-Mr. W. J. Browne Mayhew) took my remarks seriously when I spoke about what had happened in 1929 when the government of Canada engaged the Rev. Dr. Coady, the great co-operative expert, to go around Nova Scotia and organize the fishermen of that province. He did so. and the united maritime fishermen is the result. It is a very powerful organization today. Whether the Minister of Fisheries took me seriously or not, it appears that the premier of Newfoundland took the matter very seriously, because he has done the very thing that I recommended. He called a convention of fishermen. A delegation of 200 fishermen came to St. John's to a convention at the government's expense. He brought Dr. Coady from Nova Scotia to lecture the delegates on the benefits of co-operation, and on the advantages that would come to them if they would organize and market their products co-operatively and also buy their goods on a co-operative basis.
When I was speaking in the same debate I made some statements on the prices received by fishermen to which the hon. member for Burin-Burgeo (Mr. Carter) called attention the other day. It must have been fairly obvious to anyone who read my speech-and I am sure it was to the Minister of Fisheries-that when I was speaking about the prices paid to fishermen by the merchants I was not condemning all the merchants of Newfoundland. I was speaking only of course from information which I had gathered from those who had come to see me, and those with whom I had come in contact. But even then I found some fish buyers and merchants paying higher prices than others. I was criticizing those whose prices appeared to be unreasonable. Now a royal commission has been appointed in Newfoundland to investigate these prices and the fisheries prices support board is also doing the same thing. Therefore I think that further comment should be deferred until one or both of these bodies have reported.
On former occasions I have brought to the attention of this house the inadequacy of the financial terms that Newfoundland received on union, and I have asked the government to act in accordance with the terms of union and appoint a royal commission to go into that question in regard to Newfoundland. The term of union which deals with this subject reads as follows:
In view of the difficulty of predicting with sufficient accuracy the financial consequences to Newfoundland of becoming a province of Canada, the government of Canada will appoint a royal commission within eight years from the date of union to review the financial position of the province of Newfoundland and to recommend the form and


scale of additional financial assistance, if any, that may be required by the government of the province of Newfoundland to enable it to continue public services at the levels and standards reached subsequent to the date of union, without resorting to taxation more burdensome, having regard to capacity to pay, than that obtaining generally in the region comprising the maritime provinces of Nova Scotia, New Brunswick, and Prince Edward Island.
That section gave a term of eight years within which this royal commission should be appointed; but it has been my opinion from the beginning that the financial terms have been inadequate. Since, sir, the commission of government left a legacy of between $40 million and $50 million, of which about half has now been expended in two years, and the government of Newfoundland has been depending upon a transitional grant of $6J- million and drawing about $12 million a year from the surplus, it will be seen that in another two years Newfoundland will be in serious financial stress again, and as only the other day one of the ministers in the provincial government, namely, the minister of natural resources, resigned and said that in his opinion the policy of the government was driving Newfoundland into financial ruin, I believe the government of Canada should soon give consideration to the appointment of such a royal commission.
The Newfoundland government has been working with feverish energy to try and induce foreign capital to come into the province, but apart from the development on the Quebec-Labrador frontier no foreign capital has yet been invested in Newfoundland. The government of Newfoundland, however, out of the surplus, has started four enterprises of an industrial nature. They are building a cement plant and two plants for the production of gypsum products, and near St. John's they are building a mill to treat birch. The initiative for the appointment of this royal commission, it seems to me, rests with the government of Canada, as the government will have to bear the reproaches of Newfoundlanders. I hate to think what Newfoundlanders will be saying in eighty-four years' time about what happened in 1949. I think the government of Canada should consider the question now and not allow it to become a running sore. The government should show its sincerity and interest in the new province, because the problem is a very serious one. We should not have to depend upon socialistic enterprise, in which I am sure the federal government has very little faith.
The Minister of Finance remarked that the action taken by members of the North Atlantic treaty organization to protect themselves had been a great and incalculable change for

the better during the last year. The prolonged negotiations between the governments of Belgium, Holland, Luxembourg, France and western Germany in regard to the integration of the coal and steel industry terminated since the minister brought down his budget. I am sure however that he will agree that this arrangement is a matter of tremendous importance. There is reason to hope that the arrangement will mean lasting peace between these two countries, France and Germany, which have been at war so often in the last one hundred years. It seems to mean more than that; it means that these two countries will collaborate in the common defence of western civilization, which has been in such mortal peril during the last few months.
The underlying causes of these actions are due to the fear of communist aggression from Russia. There has been a general appreciation that there is no time to lose on the part of the western nations. They must unite in resistance to this hateful, inhuman thing which is opposed to everything that Christian men hold dear. The governments of western Europe and of the western world generally know the tremendous issues that are at stake -the dignity of man and the Christian conception of the importance of the individual, parliamentary government and freedom itself.
The preservation of this priceless heritage justifies the greatest sacrifices on the part of free men everywhere. For that reason members of all parties in the house have refrained from criticism of the government in raising the money necessary to carry out defence projects. Where we differ from the government is in the impact which this new tax will have upon the people of Canada. It is a principle of taxation that those best able to bear the burden should be the ones who would have to carry it. The very rich corporations, the very rich people should have to pay far more in proportion than those who are barely getting along, hand to mouth. It is a criticism which I think is justified, that in these few taxes, which seem so simple, imposeu the other day by the Minister of Finance, he has given another boost to the rise in the cost of living. And, as the hon. member for Saint John-Albert (Mr. Riley) has so well said, it is the people of low incomes who are going to feel most the effects of this new taxation.
The increased sales tax and taxes on stoves, refrigerators and washing machines will be felt most by those who are least able to bear the added cost. Today these items can scarcely be regarded as luxuries, in a country which has so much electrical energy as has Canada. To the harassed housewife, the mother of several children, it seems to me
The Budget-Mr. Sinnott that the washing machine is a godsend; and to put a tax on that is simply to prevent her and her young family from having that advantage, and seems to be imposing a hardship on those who are least able to bear it.
We can only hope that the criticisms the minister has received from all quarters in the house in respect of putting on these taxes will have some effect upon him in the future. As he deemed it advisable two weeks ago to reduce the tax on candy from 30 to 15 per cent, we can only hope that he may come to the conclusion that, after all, perhaps it is better to put a little extra tax on liquor, or on some other articles better able to carry them than the ones I have already mentioned.
The minister has mentioned that we have two things in mind, two great issues, namely the pursuit of peace and the control of inflation. In the pursuit of peace the government should take care that the standard of living of which Canada has been so proud should not be allowed to deteriorate. There is grave fear that in its methods of attaining peace it may fail to control inflation, which we all fear so much.


John Sylvester Aloysius Sinnott: Mr. Speaker, I am pleased to have an opportunity to take part in the debate tonight, which has been going on for the last week. I have listened attentively to all the speeches made thus far. I am somewhat abashed however in following the eloquence of the hon. member who has just preceded me. But after listening to him for forty minutes I must confess that I am more confused than when he started.


Mr. Harkness:: You are always confused.


John Sylvester Aloysius Sinnott: However, for those who did understand him, I understand it is a good speech.
Then, Mr. Speaker, I have listened to hon. members who have taken part in the debate thus far. I would refer first to the leader of the opposition (Mr. Drew), who during the cost of living debate brought matters of public importance to the attention of the government, and dealt particularly with the rise in the cost of living. Then he proceeded to speak for about an hour and fifty minutes, at the end of which time we were still at a loss to learn from him what we should do to bring down the cost of living.
Then the hon. member for Greenwood (Mr. Macdonnell), the official critic, and a man whom I respect highly, proceeded to criticize the government for some considerable length of time. But again, at the close of his speech I was at a loss to understand his criticism.

The Budget-Mr. Sinnott


Douglas Scott Harkness: It is chronic.


John Sylvester Aloysius Sinnott: The hon. member began his speech in this way:
Mr. Speaker, we are living at a time so critical in the history of our country and of civilization that no one with any proper sense of responsibility should allow himself to be critical just for the sake of trying to score an advantage. Whether or not we are fortunate enough to come through this period without war, I suppose it is quite likely that history will look back to the spring of 1951 as a time of critical significance.
After making a statement like that, in which he said in effect that any member criticizing the government should offer some solution and know what he was talking about, I suggest the hon. member should have spent much less time than he did spend that day.
On page 2047 of Hansard of April 16, 1951, you find the hon. member for Greenwood reported as follows:
How has this difficult situation arisen? Has it just "growed" like Topsy? Let me review it very briefly. After the unfreezing of prices and abandonment of subsidies which came after the last war, prices rose from 119 in 1945 to 123 in 1946, to 135 in 1947, to 155 in 1948, and to 167 in 1950.
At the present time it has gone up to 179.


An hon. Member:: Disgraceful.


John Sylvester Aloysius Sinnott: Disgraceful is right when you have not found any solution from a man like that who makes that kind of speech. Then he goes on to say:
As I say, the government persisted in this technique, which was designed for a depression, long after it was made clear that there was a boom. As I have mentioned in this house before, the Winnipeg Free Press referred to this as the big blunder; while the Hamilton Spectator, in rather racy language, referred to it as the disastrous holiday-mood easy-money era that found politicians and economic pressure groups doing everything in their power to make inflation a permanent institution.
Previous to this parliament the policy of the Conservative party was to have all controls abolished. When those controls were taken off then the party seems to be divided as to whether or not they should all be put back on. There is no consistency whatever in their arguments.
Then I should like to refer to the hon. member for Eglinton (Mr. Fleming), whom I consider one of the brightest members of the opposition. After listening to him speak the other evening for forty-five minutes we were still at a loss to know just what suggestions were being made to the government to cure the inflationary trend. Then we go to the bright and would-be leader of the opposition, the hon. member for Lake Centre (Mr. Diefenbaker). Here is his contribution, as reported on page 1919 of Hansard of April 11:
Mr. Speaker, I have sat here through the debate waiting to hear the answer to the question that the

Canadian people are asking: what is the government going to do about the high cost of living? What is going to be done about inflation? What measures are to be taken? For two days this discussion has proceeded, and as yet there is no suggestion that anything effective is to be done to meet a situation that affects every home in the country. No proof is needed that inflation today is terrible in its incidence and effect. No one expects the government to do everything, but at least the people as a whole have a right to expect that the government will do something at this time.
I would say that that was a pretty sensible speech, but after following it over the next two or three pages 1 find that there is not one solitary effort made to tell the government what to do to bring down the cost of living. Then we heard from the hon. member for Brant-Wentworth (Mr. Charlton) but he made no suggestions. Then we heard from the flaming hon. member for Simcoe North (Mr. Ferguson), who gave one of his great oratorical efforts tonight. We are all pleased to hear his humour. In one breath he was saying that the government was all wrong, that there should be private enterprise, and then he was saying that the government should get out of business. How can you make sense out of two statements like that?


George Alexander Cruickshank: It cannot be done.


John Sylvester Aloysius Sinnott: I intended to say something
tonight with regard to my own constituency, but with more important matters before us I shall leave that to another time. Just recently the government explored the possibility of Snow Lake, Manitoba, for the development of copper, zinc, lead, et cetera. I should like to draw to their attention the fact that in Springfield there is the possibility of developing another Sudbury in the production of lead, copper, zinc and lithium, of which there is one of the biggest deposits in the world.


An hon. Member:: Explain.


John Sylvester Aloysius Sinnott: Before I get through you will have some explanation. During the cost of living debate I mentioned subsidies on the essentials of life such as bread, meat and milk. When I refer to those subsidies I must not forget to refer to the fair section of our house. The hon. member for Hamilton West (Mrs. Fairclough) also said that these were the essentials of life, with which I quite agree. I mentioned those subsidies in order that during the next week or so the government might indicate some way in which they could be applied. However, up to the present time I have had no word from them.
Today the hon. member for Coast-Capilano (Mr. Sinclair) quoted from a pamphlet issued in Great Britain and which attempted to set

out what was going on in Great Britain. On page 9 of this socialist propaganda they state this:
Britain's Imports
One big element in the cost of living, the prices we have to pay for imports, is outside the control of the government.
Britain has to import about half its food and many raw materials. Both food and raw materials are far more expensive than before the war. And prices have taken another steep rise since the outbreak of war in Korea. Some wool for example now costs nine times the pre-war price. Hides cost six times pre-war; cotton more than seven times pre-war. Within three months of the beginning of war in Korea the price of rubber rose 70 per cent, of tin 30 per cent, of U.S. cotton, 20 per cent, of zinc 20 per cent and of lead over 30 per cent.
Then on page 13 they deal with wages and salaries. When reference is made to wages and salaries I cannot help thinking of the hon. member for Winnipeg North Centre (Mr. Knowles), and I cannot help thinking of the hon. member for gimme, gimme, gimme, gimme. It is a case of give me, give me, but give nothing back; get all you can out of the government, but do not attempt to show the government how they can get any money.


James Sinclair: Is he the hon. member for
Gimli?


John Sylvester Aloysius Sinnott: He is the hon. member for
gimme. This is what is said about wages and salaries:
What effect do changes in wages and salaries have on prices and the cost of living?
About 60 per cent of the value of the nation's output is the cost of wages and salaries.
Then we will go to another page. Remember this is published by the Labour government of Great Britain, by the socialist government, and yet we are often criticized by our hon. friends across the chamber. Here is what they say about the purchase tax.


James Sinclair: That is the sales tax.


John Sylvester Aloysius Sinnott: This is the tax about which
the hon. member for Coast-Capilano has been ribbed about so much of late. They say that this purchase tax makes little difference to the cost of living of the working people. Then in section 5 they say:
In discussing the cost of living we have touched on many of the economic problems of our society. There is no such thing as a policy for the cost of living. Just as the cost of living is the result of a number of conditions in all parts of the economic system, so an attempt to control the cost of living involves a number of different policies applied to the key points in the system.
The government has a vital part to play in all this.


Mr. Johnston:: What do you say about it?


John Sylvester Aloysius Sinnott: Have you anything more to
say before I continue?
The Budget-Mr. Sinnott


Charles Edward Johnston: What are the Liberals doing about the cost of living?


John Sylvester Aloysius Sinnott: This is what the government of Britain says:
But the government can only achieve its purpose in co-operation with the people. In the end it is the pressure of the government at one end, and of consumers at the other, that will really direct the economy in the way it should go. It is a long and difficult job, but not an impossible one.
Before I finish I may have something to say along the same lines. Now I go over to page 23, chapter 4:
Is it agreed that the greatest hope for lower costs lies in increased productivity and ending restrictive practices?
If our friends on the other side are all for controls they certainly are not of the same opinion as the Labour government in Britain. When I mentioned subsidies during the debate on the cost of living I had one thing in mind; but I left it open, because I am only a backbencher here, and I do not count for much. I have no say as to the final decision.


Charles Edward Johnston: It won't be long.


John Sylvester Aloysius Sinnott: If the hon. member for Bow River (Mr. Johnston) opens his mouth much wider it will blow up. By the way, Mr. Speaker, as far as I know he has not contributed anything to this debate so far. I am quite in accord with the hon. member for Hamilton West that something should be done about this inflationary trend; but in all the speeches we have heard in this house, both from the opposition and this side, there have not been many suggestions as to how government expenditure could be cut. I think the only hon. member to make a suggestion of that kind was the hon. member for St. Mary (Mr. Dupuis); and I think if the hon. member could go into the various real estate transactions that have taken place over the years he would find that the lawyers skimmed1 the cream off those. Just recently I read an article in a Toronto newspaper about a court case that had been adjourned six times, and the judge said the reason for all the adjournments was that the lawyers were making so much money out of real estate they did not have time for petty cases.
What I am going to suggest may not meet with the approval of everyone here, but I think it will meet with the approval of the hon. member for Hamilton West. I say that the essentials of life should be subsidized, such as bread, meat and milk. To pay for such subsidies money would have to be found; and while I am suggesting to the government that these subsidies should be paid I am also going to tell 1hem where the money can be found.

The Budget-Mr. Sinnott The hon. member for Coast-Capilano was careful in his remarks today in dealing with the tax on liquor, but I am going to propose a tax of 2 cents an ounce on all hard liquor over and above the present tax, a tax of 1 cent an ounce on wine, and a special tax on beer by the glass.


George James Tustin: Would the hon. member tell us, for the sake of information, how much that tax would bring in during the coming year?


John Sylvester Aloysius Sinnott: Sufficient, I would say, to pay the subsidy on all the milk and all the bread and' all the meat consumed in this country, with money left over for the treasury. I am not an absentee when there is a drink around; once in a while I take one, if someone twists my arm, but too many men are spending their money foolishly on liquor and leaving their families at home without the essentials. Certainly this tax should be approved by most Canadian families.


An hon. Member:: Rap the government.


John Sylvester Aloysius Sinnott: Whether I rap the government or not I am sent down here to do my job. If I am supposed to be a yes man I do not want to be here at all. I do not follow the tune of my C.C.F. friends over there. When they get out of line they are whipped right back into line. The hon. member for Moose Jaw (Mr. Thatcher) voted out of line just once. He was subjected to such a lashing by the whip that he never did it again. When the last vote was taken he whipped behind the curtain.


Mr. Thatcher:: Where were you on wheat?


John Sylvester Aloysius Sinnott: I was Johnny on the spot
when the vote was taken. There is something that can be done. If the government would allow the people to keep something instead of taking it all away in taxes we would have plenty of production. Now, when I say what I have to say I hope it will be taken in a friendly way by the cabinet. However, what I propose to say, Mr. Speaker, is not what the opposition thinks at all. During the last war, with the taxation as high as it was at that time, labour in this country refused to work because most of their earnings were taken away by their employers at the end of the month.


James Sinclair: By their employers?


John Sylvester Aloysius Sinnott: Deducted from their salary by the employers for dominion government taxes.
After very careful thought I say that subsidies are necessary, but they are only temporary. They are only necessary temporarily for the simple reason that if you


allow production to run its course it will overtake this inflationary trend. I have indicated the way in which the government could dig up some of the money, and since there are sixteen members of the cabinet I suppose they can dig up some somewhere else.
I propose now that, in 1951, the producers of this country be given a concession in their taxes to the extent of 75 per cent of the amount they produce over and above what they produced in 1950. In 1952 I would propose to give them a reduction of 75 per cent of what they produced over and above 1951. In 1953 I would propose to give them a reduction of 75 per cent of what they produced over and above 1952. This would give the producers of this country and the farmers of this country some incentive to go to work. When the producers of this country realize that they are at least going to have some remuneration for themselves if they produce more than they produced the year before, I am sure we will receive the cooperation of all the producers of this country, both in the factories and on the farm, and this inflationary trend could be stopped in that way.


James Sinclair: That is right.


John Sylvester Aloysius Sinnott: I am told by the parliamentary assistant to the Minister of Finance (Mr. Sinclair) that I am perfectly right. I know, Mr. Speaker, that production and work is the only solution. I listened the other night while the member for Oxford (Mr. Murray) quoted the nineteenth verse of the third chapter of Genesis which says:
In the sweat of thy face shalt thou eat bread, till thou return unto the ground.
Mr. Speaker, he should have gone on a little further and said: If thou wilt not work, thou shalt not eat.
I have indicated that production is the only solution to this inflationary trend. If the government will only allow the producers of this country to take hold, and will show them a three-year program, I am sure that those who produce the beef and the hogs, those who produce the essentials of life, will do the job themselves.
(Translation):


Mr. Henri Courtemanche (Labelle):: Mr. Speaker, after all those speeches dealing with the budget introduced by the Minister of Finance (Mr. Abbott), certainly our Liberal friends, weary of all these criticisms, are wondering what now can be said against the the budget. It may be that I will add nothing new to this discussion. Nevertheless, I feel

it is my duty, in times as serious as these, to express what I know to be the feelings of the people of Labelle constituency.
Moreover, I wish to state, officially and categorically, my opposition to such a budget, knowing as I do what great difficulties and responsibilities rest on those who, today, let the government impose such a heavy burden of taxes on the people, without proclaiming their refusal to approve the measure introduced, without proclaiming their refusal to follow the government in the nefarious road they are taking.
If so many speeches have been made against the budget it is because protests have come from every quarter.
It was not necessary for me to travel across the length and breadth of my constituency to find out the views of my constituents in this matter. The very first people I met, whether their political affiliation was Liberal or Conservative, all expressed the same opinion: this is a disastrous budget, a depressing budget, one which makes us consider the future with the greatest misgivings.
In any event, I have received very many letters that would have certainly enlightened me had there been any need for that. Certain people are really discouraged. Up to now, it was all they could do to make ends meet, in spite of all their sacrifices. But now the taxes they have to pay are going up constantly, as well as the cost of living. A large number of those who have families to provide for are most concerned about this situation. I can readily understand their, misgivings.
In spite of all that, one of my constituents, probably trying to find something humorous in this rather than cry over it-I must say though that he is a bachelor-wrote to me about the budget:
So far cartoonists have depicted the taxpayer as a man to whom the authorities have left only a barrel so that he will not be indecent. I rather think now that the new taxes will have done away with the barrel itself; we are being deprived of what little we had left. You will admit that that is becoming indecent.
With or without a barrel the taxpayer is in for a rough time. Some time ago the government tried to apply the policy known in the United States as a "soak-the-rich" policy. And the rich paid, so much so that there are hardly any of them left. And today we find that in trying to do away with the capitalists we have not done away with the very poor. On the contrary, overtaxing the rich has been harmful to a great many poor.
23, 1351
The Budget-Mr. Courtemanche
However, all that is ancient history now, since that well has run dry and it has been found necessary to turn to the man with a moderate income, a very moderate income, and even to the poor, to tax them on every little necessity they buy. For a good part of the day the worker and the farmer work only to pay taxes, to fill up the treasury. It is better not to try to figure out the amount of taxes we pay on any one dollar article, for the answer would leave us greatly discouraged.
Some may say: What about defence? I am all for the defence of Canada, but I am a little less enthusiastic about the defence of Korea. However, the defence of Canada or Korea does not imply that we should ruin our country. Some will say that our way of life, our institutions, our democracy are at stake. It is precisely because we must save all those things that we should not fight our enemy on the one hand and give him arms and munitions on the other.
By overtaxing the people, by refusing to take any steps to curb inflation, we are supplying arms and munitions to those we claim to be fighting in Korea or elsewhere. Inflation, let us never forget it, will always be a powerful weapon in the hands of our enemy. If the communists found it so easy to control China, it was largely due to inflation, to soaring prices. It is to be deeply regretted that our leaders do not understand that or act as though they did not understand it.
If it is really a matter of defending our country, the task surely becomes complicated, if not impossible, because of these tremendous imposts and of the fantastic rise in prices.
I beg permission to read extracts from articles on these new taxes, which appeared in two French-language weeklies. One is Notre Temps, the other Le Front Ouvrier, two publications aimed at two different classes of readers.
This is what Mr. Fernand Bourret writes in he Front Ouvrier:
The burden of war expenditures will be borne by the taxpayers, through the payment of all kinds of taxes. If the present basis of taxation were modified, it would be possible perhaps to lighten some people's burden, but in the main, however, the taxes made necessary by our war spending are impoverishing the country and reducing our standard of welfare.
The freezing of prices might make it possible to relieve the pain caused by the high cost of living.
2312	HOUSE OF
The Budget-Mr. Courtemanche
Such relief however would only be temporary, and the pain would again be sharply felt as soon as the analgesic had lost its effectiveness.
The high living costs due to heavy taxes, ever-increasing government expenditures, undue profits, combines and restrictions of all kinds which slow up production and keep prices from going down, can only be remedied through concerted efforts, especially as regards war spending.
Here is now the opinion expressed by Mr. J. T. Larochelle in Notre Temps. Let us see first what he has to say on the sales tax:
An important point the minister has not cared to stress is the pyramiding of the sales tax which is bound to occur in connection with a great number of commodities in current use. This tax is levied on raw materials, on the semi-manufactured product and finally on the finished product. Thus it is levied as much as three or four times (according to the number of taxable transactions) in greater amount every time before the product finally reaches the consumer. In most cases therefore the official increase from 8 to 10 per cent will, in fact, be much greater than suggested by the minister, the proportion varying according to the commodities.
In other words, we have a pyramid. And what a pyramid! That is why, a moment ago, we said it might be better if we did not try to find out the tax content of the dollar we earn and spend,
Although I do not necessarily share all Mr. Larochelle's opinions, here are the conclusions he draws in Notre Temps:
One must conclude that, in deciding upon new taxes, the Minister of Finance and the government have not taken into account the general interest and the economic conditions brought about by our military effort. Far from curbing inflation and the increase in the cost of living, they have levied taxes which, they admit, threaten to entail a large increase in the cost of essential goods. In the general calculations of the budgetary estimates, they have even speculated on an increase of approximately 5 per cent. The increase in taxes, like the rise in prices,-and the latter may easily climb by 10 per cent within a year,-entails no real sacrifice except for families already living on a small or moderate income, the very families that should be spared, while limited companies, whose profits are increasing and will continue to increase as a result of military contracts and inflation, are on the whole, being spared.
I do not agree with the author in the closing sentence of his article because I believe that, except in a few cases, limited companies, whose shareholders are very often people in the low income groups, people with small savings, will be very hard hit by these new taxes.
Be that as it may, these two responsible newspapers do not hesitate to condemn the budget brought down by the Minister of Finance. In so doing, they only reflect the opinion of both the urban and the rural population. There is no point in deluding ourselves: the people are angry, very angry in fact, because they feel let down by their
IMr. Courtemanche.]

own government. It is not surprising that in trade union circles there is talk of requesting wage increases which would inevitably bring about higher prices. But all workers do not belong to trade unions. Farmers, for instance, are not affiliated to any of them; yet the cost of living has dealt them such a blow that they wonder what the future holds in store for them.
One aspect of the budget, however, has not been sufficiently stressed. It is a provocative budget not only because of its harshness but also because of its presentation. The government raises taxes while claiming that it wishes to curb inflation. And once these increased taxes have boosted the cost of living still higher, the people are asked to economize on a larger scale.
I know that, during their election campaigns, the hon. members opposite are in the habit of making all kinds of promises they soon forget. I must also admit that quite often, and too often in my opinion, the electors do not hold it against them unduly.
Yet I feel that, where a new series of taxes is concerned, the people are not such good fellows, nor are they so naive. According to an old saying, the pill has been sugar-coated. That is all very well but it is quite another matter to give the impression that there is no pill at all and that both the coating and the inside are exactly the same. Since we are on the subject of pills, that is one the people will not swallow.
When he was told last year that taxes would not be raised the hon. the Postmaster General (Mr. Rinfret) expressed his gratitude to the Minister of Finance, stating openly that higher taxes would have increased inflation. It is utter nonsense today to try to make us believe that taxes are being increased in order to stop inflation. The Minister of Finance acts indeed, Mr. Speaker, as though he wanted us to experience the worst inflationary conditions.
Has any thought been given to the dire consequences of inflation, which the new taxes will help along? Has any consideration been given to the widow who thought she had no reason to dread the future and who finds out now that the value of the insurance she lives on has decreased by about 50 per cent. Have the disastrous effects of inflation on a multitude of thrifty people been taken into consideration? Has any thought been given to the fact that it would

discourage saving? Apparently not, for after the imposition of all these taxes, surtaxes and overtaxes, people are being urged to save.
Of course I am in favour of saving. But one should not try to make the taxpayer believe that he must or can save with the budget of the Minister of Finance.
I know that the minister is surrounded and advised by learned experts and by economists with stacks of diplomas. I am afraid however that these learned experts, these distinguished economists do not come down often enough from their ivory tower. Their work is apparently limited to somewhat abstract calculations. I appreciate their learning. I would not dare contradict an astronomer who would tell me that the earth is so many miles from the moon. But there is someone who is able to contradict the learned experts of the Minister of Finance and I refer to the Canadian housewife who cannot be satisfied with mathematical calculations but has to do the buying for the family and realizes that her husband's earnings, though they may sometimes seem increased, are no longer sufficient to feed, clothe and house the family.
I wish the experts would spend a little time asking questions of the man in the street to find out how he reacts. Naturally, such is not their responsibility. And I know that some experts in England were offended one day when someone took it upon himself to blame them and tell them that their plans were not practicable. One of them replied that "he did not care whether his plans would work out or not." His job was simply to set them up. Having talked, a few days ago, with a few immigrants recently arrived from Great Britain, I got the impression that the British experts were leading their country to the very brink of disaster, if not to complete ruin.
Mr. Speaker, I wish to make it clear that the Canadian taxpayer has no intention of being led as the British people are being led and have been led for the past few years. If we had wanted socialism, we would have elected our friends of the C.C.F.; if we had wanted a receipt instead of a pay envelope, we would have elected representatives of socialism. This is not what happened, however, and as things stand at the moment I am afraid the C.C.F. will claim before long that the Liberals have stolen their platform. It is true that socialists have been said to be
23. 1951
The Budget-Mr. Courtemanche merely Liberals in a hurry. That was some time ago and it might be that today the Liberals, without hurrying, have nevertheless caught up with the socialists.
But let us come back to the budget and the new taxes. Have its repercussions on the provincial and municipal authorities and the school boards been considered? The premier of Quebec has already complained, and rightly so, that more than 77 per cent of all revenues in Canada were collected by the Ottawa government, leaving only 22 per cent to the provinces, municipal corporations and school boards. That situation has not been improved by the Minister of Finance when he devised those new taxes, and the way things are being done, this government in Ottawa is going to have a new monopoly on taxation.
We know that the centralists have not abandoned their projects or their schemes. Since they cannot succeed by constitutional amendments or by any such means, they are undoubtedly contriving to starve the provinces. What they say runs somewhat as follows:	"We will not tamper with your
rights; have no fear. We will be satisfied with depriving you of your income!" Now, of what value are rights without powers or sources of taxation?
Indeed, it must not be forgotten that taxation cannot be carried out indefinitely, without ill effects. If it is overdone as it was in the new budget, where will it lead us?
The Calgary Herald at one time published an article which reads as follows:
Let us harbour no illusions about income taxes. They penalize industry, and penalize brains. The skilled, enterprising man who really contributes to the material welfare of society is being victimized. The greater his abilities and the more he uses them, the more money he has to pay the government.
Under the present taxation system in Canada it does not pay to work hard, to be intelligent, to produce. Thousands of Canadians, in all income brackets, escape taxation in a way that is perfectly legal and honest; they work less than they could, produce less than they could, earn less than they could. They pay less taxes but, in so doing, produce less.
The damage wrought by this behaviour is infinitely greater than that caused by any other attitude. Throwing people into prison is no remedy.
But what are we to say today, now that we have a surtax on income tax? A government supporter has stated that we should produce more. But who is going to ruin his health or neglect his family or forgo all leisure just to pay higher taxes? If the

The Budget-Mr. Courtemanche key to freedom is to be found in production, let us encourage and not stifle production.
If Isocrates were still alive he would surely repeat that those who make money are considered as criminals because they are more harshly penalized than real criminals.
To my mind income tax is the most harmful of all forms of taxation, because it stifles initiative and discourages those who are industrious and active. It is unnecessary, I hope, to repeat that this income tax is especially hard on people of low income. Gone are the days when only rich men suffered from this tax. Nowadays if one manages to stay alive and to dress in a halfdecent way, one is sure to be the butt of the traditional April fool's joke perpetrated by the Minister of Finance, by the present incumbent as well as by those who have preceded him in that office.
This income tax surcharge cannot be justified. As far as its repercussions are concerned, they will certainly be disastrous.
But, some will say, it is luxuries that are taxed. Let us have a look at these luxuries. Washing machines, refrigerators, automobiles? Of course, they may, at times, be luxury items but generally they are daily essentials. For many people, a car is a means of livelihood. It is essential to a good many people. Now these items are taxed beyond all limits.
Cigarettes too are luxury items, according to the minister's experts. Personally, I do not think so, although I do not smoke. Whether we like it or not, this new tax will only encourage smuggling. Of course, the police will keep a closer watch at customs ports, but even then there will be more smuggling than ever before in the history of this country. We see in the papers that already important seizures have been made. But everybody knows that they represent only a very small part of the actual smuggling going on.
That may well bring about a large decrease in the government's revenues, in spite of the tax increase. But what worries me more is that our people are once again tempted to resort to fraud, illegal practices and dishonesty. In my opinion, that is even more serious than the rest. We have not forgotten the wartime black market, and we also know of a certain grey market in building materials. Let us not delude ourselves. Nearly


everybody had a hand in the pie and nearly everyone has disregarded and defrauded our laws. Prohibition had disastrous consequences in the United States, not so much in loss of government revenue as on account of the deplorable state of mind it induced. Excessive taxes on cigarettes will inevitably have the same results. In Ottawa, in Montreal and nearly everywhere in Canada people are smoking more American cigarettes than ever before. We have no right to kill an industry and, more particularly, we have no right to prompt people to act illegally.
As far as the new sales tax is concerned, or rather the increase of the existing tax, it is what I would call an underhand tax, a too well hidden tax, which lets the customer believe that the shopkeeper is making an undue profit, when it is the federal government which taxes, one after the other, all the raw materials and finally the finished product. A pyramid, I said a moment ago, a pyramid which unfortunately reflects no great credit on our times. That 10 per cent tax will, more than any other, increase the cost of living. If the 8 per cent tax was a factor of the high cost of living, what will be the effect of that increase to 10 per cent?
And it is the same thing, sir, for all the new taxes or the tax increases contained in the new budget. Of course, taxes are necessary and new taxes always meet with criticism. However common sense should prevail and I think that this time the government has gone too far. The government make's a pretext of defence to go on a spending spree, to incur wartime as well as peacetime expenses which, far from strengthening our position, may very well weaken it to the point where our enemies will gloat over it.
The government wants to play the part of a great power and for that reason is inconsiderately taxing the people. Let us not forget the fable of the frog that wanted to be as big as the ox. The Minister of Finance could have been less exacting without endangering the defence of our country. On the contrary by not endangering our way of life as he is now doing the minister would have only strengthened the belief of the people in the value of the present system.
For all those reasons, I consider that the budget strikes a hard blow not only at the economy of the nation, but also at the defence of our country.

(Text):


Edmund Davie Fulton: Mr. Speaker, it seems to me that if there is one thing that the budget and the proposals for raising additional taxes which have been laid before the house by the Minister of Finance (Mr. Abbott) revealed, and if there is one thing above all others which the reaction to the budget throughout the country revealed, it is the necessity at which we have arrived in this country of making a real and genuine effort to reduce non-essential government expenditures.
I am not one who lacks confidence in the Canadian economy, or confidence in the willingness of the Canadian people, and their ability to bear any proper load which may be placed upon them; but I say we have reached the point when the interests of the Canadian people and the welfare of the Canadian economy demand that, at a time when they are being asked-and properly-to bear the heavy load of defence expenditures, they should be relieved of the load of unnecessary and extravagant governmental waste.
It is true, with respect to the increases in taxes the Minister of Finance has outlined in his budget, and it is true with respect to the extra revenues the minister says he has to raise, that we have inflation, which of itself produces or, in the past, has had the effect of producing about twice the surplus for which the minister has budgeted over the years-and will probably do the same again this year. But that very inflation and the increased cost of living which it imposes upon the Canadian people make it essential that we reduce our expenditures so that those taxes which bear on the cost of living and which, in fact, increase the cost of living, will not be necessarily increased simply as the result of spending such as we find taking place at the present time in many fields, if we examine the details of the estimates for this year.
The burden of defence preparedness is another factor which makes it so much more essential even than it was in the past that we should reduce unessential expenditures. After all, last year the Minister of Finance told us in his budget speech of March 28 that we had at that time reached the limit of buoyant revenues, reached the point beyond which any increased expenditure would have to be provided for out of increased taxation.
That being the case, then how much more essential it becomes, when we are faced with
The Budget-Mr. Fulton a burden over the next few years of several billions of dollars of increased expenditures, that we should search for and find and insist upon the reduction of non-essential expenditures. The parliamentary assistant emphasized this point in his speech this afternoon. He emphasized the point made on March 28 last year by the Minister of Finance when, as reported at page 1216 of Hansard, he said:
The conclusion then which I reach is that no minister of finance in the foreseeable future will have an easier task than I have, namely, that of covering about $2,400 million of expenditure.
In other words he was saying there that it is not foreseeable that in future years we will have a level of expenditure below $2,400 million. Mr. Speaker, $2,400 million is what the government was asking a nation of from 12 to 14 millions of people to undertake, apart altogether from defence expenditures, as the level of spending of the federal government alone.
This leads me to the point where I think we should accept the challenge which was issued in the past by the Minister of Finance and repeated this afternoon by the parliamentary assistant to suggest some positive way in which the government could make economies. I find it interesting to note that for the second time in this session the parliamentary assistant to the Minister of Finance (Mr. Sinclair) appears to be more concerned with showing how difficult it is to reduce expenditures and spends far more time pointing out why we cannot reduce expenditures than he spends in really trying to find out how we can reduce expenditures. Again I suggest that if he would bend the same energies to finding possible economies as he does to justifying the extravagance of the government we might hope for a more equitable burden of taxation on the Canadian people.
Since it is close to eleven o'clock and 1 intend to discuss some details in this connection I should like to move the adjournment of the debate.
Motion agreed to and debate adjourned.



BUSINESS OF THE HOUSE

Alphonse Fournier: The hon. member for Kamloops (Mr. Fulton) will continue this debate tomorrow.
On motion of Mr. Fournier (Hull) the house adjourned at 10.55 p.m.

Tuesday, April 24, 1951